How to Use Cash Advances On Your Credit Card

Cash advance is a feature when you swipe your credit card at the ATM to withdraw cash. Usually you withdraw the cash at an ATM machine using an ATM card which usually also doubles up as a debit card. The difference between using an ATM card and a credit card at the ATM machine is that whatever money you withdraw using your credit card, it is considered as a loan which is chargeable by a certain rate of interest. This rate of interest is usually pretty high and ranges from one to 4% month. Using your credit card to withdraw cash as a cash advance is different from using the credit card traditionally because usually there is no grace period of the money that you withdraw. The money that you withdraw as a cash advance from the ATM machine will begin to accrue interest right from the first day as opposed to using a credit card which only accrues interest if you take the balance from one month to another.

Before you take out a cash advance on your credit card make sure that you are aware of the terms and conditions along with the fees involved. If you are not sure of the terms and conditions of a cash advance speak with someone at the customer service desk of your credit card.

Cash advances can be used emergencies like unexpected medical expense but avoid using it for day-to-day expenses.

You should be aware of your cash advance limit. Usually you will not be allowed to withdraw beyond your cash advance limit but just in case your creditor allows you to go over this limit when you withdraw money you put in extra charges and higher interest rates not only on the advance but also on your regular credit card interest rate.

If you have to withdraw money is a cash advance on a credit card use a credit card that has a zero dollars balance. Credit cards that have multiple types of balances such as purchased balance, cash advance balance and balance transfer balance then typically they are just any payment you make towards the balance with the lowest rate of interest. Typically a cash advance will have a higher rate of interest than a balance transfer balance. It means that any payment you make will first go towards paying off your other debts while the interest charges on your cash advance continue to accrue. This may make cash advance more expensive and difficult to pay back.

Avoid using a credit card that you have taken out the cash advance on to make of the charges. Not only will this help to keep your debt under control but also because of the reasons mentioned above regarding the lowest interest balances being paid off first.

The need for quick cash advances usually a typical sign of money problems. Money problems could be result of more deep-rooted problems such as the absence of an emergency fund, overspending and bad credit management. In situations like this cash advance is not the solution to a problem. While it may offer temporary relief in the long run it may put you under more of a financial burden than you already are in.

There are some alternatives to taking out a cash advance such as a small loan from your bank, borrowing from close family friends, a day advance from your employer, negotiating with creditors to extend due date of payment, consumer credit counselling and even local hardship programs to deal with a financial crunch.