Instant cash advance – Why is it expensive?

When you’re short of money, you should consider an instant cash advance as a possible solution to your financial challenge. This means you will access money without applying for an official loan. Cash advances don’t need a credit check when taken from existing accounts. They can provide money in a short time.

No wonder 12 million Americans use this type of loan every year. The average cash advance loan is $350 on a two-week period, while the average repayment is estimated at $500.

What Is a Cash Advance?

A cash advance is nothing but a short-term loan, often provided by a credit card operator. Taking out a cash advance means borrowing funds within the credit limit on your credit card. It may involve an independent APR and a service fee. Some issuers may also impose a specific credit limit on cash advances.

The fee and interest are traditionally related to the size of your withdrawal and the length of your repayment. So cash advances happen to be expensive, which makes them unsuitable as a long-term solution to financial problems.

Management of Cash Advances

Before borrowing money from financial institutions, it’s important to understand the related expenses. This knowledge is required for having a convenient user experience. Thus, you will be able to pick an Instant Cash Advance with the most attractive terms and conditions.

Primary Expenses

The charges for credit card cash advances consist of service fees and interest rates. The typical service fees jump from $5 to $12, from 3% to 8%. Most bank cards don’t provide a grace period for cash advance loans. You are expected to pay an interest rate from the first day the cash advance amount appears on your bank card. The typical interest rates jump from 18% to 30% APR.

Some cards come up with different APRs for different types of cash advances. Large financial institutions impose APRs on cash advances when they are withdrawn from the ATM, over-the-counter, cash operations, and so on. This is why it is essential to check your credit card’s policies to know what to expect from a particular card.

Secondary Expenses

Compared to payday loans, instant cash advance loans are often limited to an available credit line. For example, if your credit limit is $1,500, your cash available is going to be around $300. Every operation comes with a 4% fee. So you will pay $12 upfront and about $8 in interest.

Credit checks issued by your credit card operator can lead to unexpected expenses. If you proceed with a check over your cash advance limit, your credit company won’t accept your check. Ideally, you will get in touch with your credit card company before any checks to ensure a cash advance doesn’t cross your limit.

Withdrawing a cash advance from an ATM will need you to cover a charge from the bank or company responsible for the cash advance. If you want to receive funds in an international currency, you will be charged extra as well. And if you get access to an international currency at the ATM, you may also cover a charge for the cash advance services. This includes an international transaction fee and/or an operator fee in the ATM.

After all, you will have a limited timeframe for repayment. If you don’t cover your loan within 60 days, your card provider will definitely apply a penalty.

Is a Cash Advance Good for You?

An instant cash advance is an easy yet costly way to get the necessary amount of money online. You need a cash advance credit line on your credit card. If this is the case, you will need to cover your debt in a short time. Don’t forget that your credit cash advance line turns out to be a limited percentage of your general credit line and that interest charges appear immediately.

You should understand the related charges. How reasonable are they? And how acceptable are they? In many cases, there are more affordable alternatives to cash advances. If you’re a business person, make sure to look through the instructions attentively. Otherwise, you may drag yourself into a debt cycle that is hard to get out of. Make sure to find the loan type that addresses your needs and suits your financial background. You will most likely want to consider other options if needed.

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