If you’re ever in need of cash fast, using your credit card to get a cash advance can be a tempting option. All you need to do is put your card into an ATM, and you’ll be able to withdraw money right away. While there’s no denying the convenience factor, using your credit card like a debit card is an expensive way to manage your finances.
A credit card cash advance allows you to withdraw money directly from ATMs. While similar to debit, you’re accessing cash that isn’t yours. You’re essentially taking a loan from your credit card provider.
Cash advances are most commonly associated with ATM withdrawals, but your cardholder agreement may also consider the following transactions as cash advances when you use your credit card.
Generally speaking, if you can perform a transaction with your credit card that can be converted into cash, it’s considered a cash advance. There’s also typically a limit of how much you can withdraw as a cash advance. That amount may differ from your regular credit limit.
Getting a cash advance takes no time at all, but it’s an expensive way to access money. There are a few different fees you need to pay, including:
Admittedly, credit card cash advances can be beneficial in a few specific circumstances.
These are two very extreme cases where a cash advance would make sense. Even then, it should only be in an emergency when physical cash is required.
Understandably, sometimes you may need cash. If you’re not in a huge rush, you should consider one of the following options:
Although it may take more effort to get cash with one of these options, you’ll pay significantly less in fees and interest compared to a credit card cash advance.
Cash advances will always be expensive, so you’re better off avoiding them. Regardless of where you borrow money from, try to pay down your debt as soon as possible to avoid any additional interest charges.
Barry Choi is a personal finance and travel expert. His website moneywehave.com is one of Canada's most trusted sites when it comes to all things related to money and travel. You can reach him on Twitter: @barrychoi.