All About the Cash Advance On A Credit Card

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21 NOVEMBER, 2022
All About The Cash Advance On A Credit Card
A credit card helps make purchases, and most of you know this. However, the option of a cash advance, meaning cash withdrawals in advance using credit cards, is less explored.
Cash Advance on a Credit Card is the facility that allows you to withdraw cash from credit cards. Banks enable customers to withdraw funds from their credit card accounts with this cash advance facility. Simply put, when using the cash advance credit card features, you borrow money against your credit card.
Functional Aspects of Cash Advance on Credit Card
Suppose you only use credit cards for everyday purchases. A cash advance may seem appealing. And might seem a good choice if you need money immediately, but ensure a limited amount of money in your bank account. The cash advance option solves the resource problem.
In contrast to a debit card withdrawal, where you are accessing money from your account, a cash advance is essentially a loan from your credit card company charged to your account. Since cash advances frequently have a higher annual percentage rate and a transaction fee, you will need to be responsible for paying the cash advance fees on a credit card. Additionally, there is a limit on how much you can advance, which further limits the usability of this option.
Different Ways to Encash Credit Card
Listed below are some of the common ways to get cash from credit card using the cash advance option:
Cash Advance Fee in Credit Card
Obtaining cash advance on credit cards involves several costs and convenience fees, as detailed in the sections below:
Ways to Reduce Cash Advance Fee
Although a cash advance may not be a wise financial move; however, if it's your only option, bear the following considerations in mind to reduce additional costs:
Impact of Cash Advance on Credit Score
Utilising a credit card cash advance won't harm your credit score because credit bureaus do not report these transactions. However, occasionally you might struggle to keep up with your monthly payments due to the high APR on credit cards cash advance. Consequently, even a single missed payment can lower your credit score and be recorded on your credit report.
Conclusive
Credit cards offer numerous advantages and choices for facilitating cashless payment. However, for some purchases, you only need paper money; in these cases, the ability to get a cash advance on a credit card can be useful. You can withdraw cash using this payment method while using your credit card.
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