Alternatives to a Credit Card Cash Advance
If you’re in need of fast cash to cover essential or emergency expenses, you might consider a credit card cash advance. But before you take one out, be aware that credit card cash advances come with some drawbacks. The good news is there are alternative options to help you meet your goals. Here’s a closer look at how a credit card cash advance works, how to get one, and alternatives to a credit card cash advance.
What is a credit card cash advance?
A credit card cash advance is a borrowing option that lets you withdraw cash from your credit card account. You can think of it as a short-term credit card loan. Credit card cash advances often have high interest rates and fees. Plus, you can only take out a percentage of your available credit limit. While a credit card cash advance might seem like an easy way to get cash, it can be very expensive.
How to get a credit card cash advance
To get a credit card cash advance, follow these steps.
- Read your credit card agreement: Before you take out a credit card cash advance, take a look at your credit card agreement. Find out whether cash advances are allowed. If they are, familiarize yourself with their fees and interest rate.
- Understand how much cash you can withdraw: Many credit card companies cap how much cash you can withdraw with a credit card cash advance. It’s typically a percentage of your credit card limit.
- Choose your method: In general, there are three ways you can take out a credit card cash advance. Depending on what your credit card issuer allows, you may withdraw cash at an ATM, withdraw cash from your card at one of your bank’s locations, or use a cash advance convenience check.
Drawbacks of a credit card cash advance
Just like every financial product, a credit card cash advance comes with some disadvantages, such as:
Higher interest rates
Credit card cash advance interest rates are usually higher than rates for credit card purchases. This means you’ll pay more to borrow money.
No interest-free grace period
Some credit cards offer a 0% APR promotional period that lets you avoid interest charges for anywhere from six to 21 months. But with a credit card cash advance, you will have to pay interest no matter when you take one out.
Fees
In addition to interest, you’ll be responsible for a fee when you opt for a credit card cash advance. The fee may range from 3% to 5% of the total amount of cash you request.
Lower limits
Many credit card companies will limit how much cash you can take out with a credit card cash advance. Your limit will likely be a percentage of your available credit limit.
Credit card cash advance alternatives
There are many alternatives to credit card cash advances, including:
Payday loans
Payday loans are short-term, small-dollar loans you can repay when you get your next paycheck, typically within two to four weeks. A payday loan can be a good credit card cash advance alternative if you need fast cash to tide you over until your payday.
Installment loans
Installment loans are short-term loans that offer a lump sum of money upfront. You can repay them in fixed monthly payments, or installments, over a period ranging from a few months to a few years. An installment loan might be the right credit card cash advance alternative if you need to borrow a lot of cash at once.
Title loans
Car title loans are secured loans that let you use your car as collateral. You give your lender your title in exchange for cash, based on the appraised value of your vehicle. You’ll be able to drive your car as you pay back your loan. If you own your car, a title loan is worth exploring as an alternative to a credit card cash advance.
Lines of credit
Lines of credit are flexible loans. They are similar to credit cards, but usually offer lower interest rates and larger amounts. Borrowers can withdraw funds whenever they need to cover expenses, up to a set credit limit, and will only pay interest on the money they borrow. A line of credit should be on your radar if you’re looking for a flexible loan.
Think twice before getting a credit card cash advance
Even though a credit card cash advance is convenient, it’s an expensive way to borrow money. That’s why it may be wise to consider alternatives to credit card cash advances.
At Advance America, we are pleased to offer some alternative options, such as payday loans, installment loans, title loans, and lines of credit. After you apply for these loans in-store or online, you may get your money quickly, sometimes within 24 hours. Visit Advance America today to find out more about the credit card cash advance alternatives we offer.
