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Taking out a cash advance on your credit card can sound appealing: You get easy access to money, which you might need to buy groceries or pay rent.
But there are significant downsides to cash advances, including fees that tend to be high and interest that starts accruing immediately. There’s often a cap on how much you can take out, too, and generally it's much lower than your card's overall credit limit.
So while they might be an available resource — and a better option than, say, taking out a payday loan — cash advances should be used only as a last resort if you are in a financial emergency.
Before you take one out, consider these alternatives:
» MORE: 19 ways to find fast cash
1. Low-interest or 0% intro APR credit cards
Some credit cards offer 0% intro APR periods on purchases, meaning you can use them to finance the purchase of groceries and other essentials without paying interest upfront. Of course, you'll still owe the money, but you'll have a significant period of time — often ranging from six months to nearly two years — to pay it back in full before the interest kicks in.
With the Wells Fargo Platinum card, for example, you can take advantage of a 0% intro APR for 18 months from account opening on purchases and qualifying balance transfers, and then the ongoing APR of 16.49% - 24.49% Variable APR.
Other cards offer low interest rates on purchases only: The Chase Freedom Unlimited® offers 0% intro APR on Purchases for 15 months, and then the ongoing APR of 14.99% - 23.74% Variable APR.
2. Credit card loan programs
Some credit card issuers offer loans to existing customers which, among other things, allow them to pay certain purchases off, over time, for a fee. Examples of this are AmEx’s Pay It® and Plan It® features.
Similarly, Citi offers a Citi Flex Loan and Chase has My Chase Plan and My Chase Loan. The programs allow customers to borrow money at a lower rate than they would get with a cash advance and to pay it off over time.
3. Third-party payment services
If you need to buy some time before your next paycheck, you could consider a service like Plastiq to tackle some bills. The site allows you to use a credit card to cover expenses that often aren't otherwise payable that way, including rent, utilities, day care, etc. For a 2.85% service fee, Plastiq will charge your card for the bill, make out a check to the vendor in your name and then mail it to them.
Assuming you can pay off the bill quickly — that is, without carrying it over to the next month and getting hit with your credit card's double-digit interest rate — a 2.85% convenience charge may be worth it and can be cheaper than other options. If you use a rewards credit card for the bill, it can also help defray that upfront fee.
4. Buy now, pay later services
It’s sometimes not feasible to cough up a large sum of money at one time, whether you’re strapped for cash or not. Buy now, pay later providers, like Affirm, Afterpay and Klarna, allow users to break up purchases into small installments that you can pay over time — typically anywhere from three to 12 months.
While some BNPL options come with interest rates and fees that can be costly, if you are able to pay off your bill within a short period of time, they can offer more flexible financial relief.
It is important to note, however, that BNPL is offered only by specific merchants. This means that if you need cash fast for rent or groceries, for example, the services may not be of help to you.
5. Flexible credit card options
There are alternative credit cards that can offer flexible and less costly financing options than cash advances. For example, the $0-annual-fee Upgrade Card allows holders to dip into their credit limits for personal loans. Customers can pay back the amount borrowed in equal monthly installments at a fixed interest rate.
Alternative cards are often more accessible to those who might not be able to qualify for more traditional credit cards. That’s because many of them don’t rely solely on typical credit scoring models when determining eligibility. Such cards include the Petal® 2 "Cash Back, No Fees" Visa® Credit Card, the AvantCard Credit Card and the Chime Credit Builder Visa Secured Credit Card.
6. Personal loans
Lenders offer many types of personal loans, including secured loans, which are backed by collateral, and unsecured loans, which aren't. Some come with fixed rates, which means you pay the same amount every month until the loan is paid off, while others offer variable rates, which means your payments can change over time. Rates generally vary from 5% to 36%.
While the interest rate is still relatively high, it can be lower than a cash advance, especially after you consider the other cost involved in taking one out, which is typically a flat fee or a percentage of the amount withdrawn.
7. Alternative 'quick cash' options
If you’re in a pressing financial situation and require more immediate funding, there are some fast ways to find some relief:
Cash out your rewards: If you hold a credit card with a cash-back rewards program, you might be able to redeem your rewards for a good chunk of change.
Request an advance on your paycheck: Although a cash advance on your credit card can be risky and costly, asking your employer for a cash advance on your pay can be a way to cover your financial needs, without incurring any fees or charges.
Ask for local assistance: Many local organizations offer financial assistance for those facing hardships. Local organizations that can typically be of aid might include religious organizations, nonprofit organizations or community centers.