You’ve probably seen this feature on your credit card and wondered what it is. The cash advance feature allows you to take out a loan against your card’s credit limit. You can use that money for any purpose, but there are some important things to know about how it works.
They’ll cover everything from the cash advance to how much interest you’ll pay when using it. How to transfer money from a credit card? SoFi experts state, “This is a possibility, yes, as long as your credit card has a cash advance feature and you are below your credit limit.”
What is the Cash Advance Feature?
The cash advance feature is a credit card feature that allows you to withdraw cash and pay for purchases.
The cash advance feature is most often used to pay for travel expenses, such as flights, hotels, and rental cars. You can also use your credit card to pay for other items that are not part of your regular monthly budget. For example:
- Renting a car or limousine service.
- Paying off your utility bill (rental fees).
- Purchasing concert tickets or event passes.
You can use a cash advance for a variety of purchases
The cash advance feature on your credit card offers a convenient way to access cash when needed. Cash advances can be used for a variety of purchases, including:
- Hotel stays
- Car repairs and maintenance
- Medical bills or other expenses not covered by insurance
They are also useful for paying everyday expenses, such as groceries and gas.
Cash advances will have their own fee and interest rate
Cash advances are treated differently than other purchases on your credit card. They have their own fees and interest rates, which can be a little confusing. Here’s what you need to know:
- There is a cash advance fee. The fee will be listed on the front of your monthly statement. Most cards charge between 2% and 4% of the total amount borrowed, but some charge as much as 5%. The average cash advance fee is 3%.
- The cash advance APR is typically higher than that for purchases made with the same card (usually around 10%).
- Cash advances have special interest rates— usually range anywhere from 12%-30%.
Start paying off your new cash advance balance right away
How should you pay it back now that you’ve got your cash? You’ll want to start paying off the balance right away. That’ll help prevent interest from accruing, which could be expensive later on.
A cash advance feature is a handy tool for emergencies, but only if you can afford to pay it off quickly. If not, call your credit card company and ask about a line of credit or other options. And don’t forget about any fees associated with using the service as well!
The cash advance feature is a useful one, but it should be used with caution. If you use this feature on your credit card, it’s recommended that you only use it for emergencies and not as a regular way of spending money. Paying off the balance then and there will help keep interest rates low and avoid fees altogether!