A cash advance is a service that allows credit card holders to withdraw cash from their available credit limit. While convenient, it typically comes with high fees and interest charges.
How It Works
You can access a cash advance at an ATM, bank branch, or through convenience cheques linked to your credit card. Unlike regular purchases, interest on cash advances starts accruing immediately, with no grace period.
Costs Involved
- Cash advance fee: A flat fee or percentage of the withdrawn amount.
- Higher interest rate: Cash advances often carry higher rates than regular purchases.
- No grace period: Interest starts accruing immediately, unlike with regular purchases.
Final Thoughts
Cash advances should generally be avoided unless absolutely necessary. They are one of the most expensive ways to borrow money, making them best reserved for emergencies.