Credit card cash advances are best known for the quick processing they provide, from the time you apply to borrow money to the time you receive it. Although a cash advance may seem like a simple way to borrow money quickly, the interest and fees associated with one can add up quickly.
It is important for you to be well informed about the terms before taking out a cash advance on credit cards to avoid getting caught off guard. Better yet, we would advise you to steer clear of cash advances entirely. Keep reading to find out more details about cash advance on credit cards, and if they're better than personal loans.
A cash advance on credit cards is one of the financing methods where the borrower withdraws funds from their credit card account. You are essentially borrowing money from your credit card to put money in your wallet/account.
You can obtain cash advance on credit cards from a bank teller, an ATM, or a convenience check. You will need a PIN in order to withdraw cash from an ATM. To get the pin, you can simply call your card company's customer service line and ask them to set a PIN for your account. The procedure for withdrawing money once you have the PIN is the same as when using debit cards.
Here is a list of some major credit card companies in Singapore. If you use one of these services, you can use these numbers to get a PIN for your credit card.
You can also obtain a cash advance on credit cards using a convenience check. These cards may have previously been sent to you from the bank. Convenience checks with special offers are frequently sent to customers by credit card companies. You can utilize convenience checks the same way you would a regular bank check.
The amount of money you can get using a cash advance on credit cards depends on your credit score and on your credit card company. The higher your credit score, the more money you can request to withdraw using a cash advance on your credit card. The highest amount you can request to withdraw is your credit limit minus the cash advance fee. Some financial institutions might also set a different cash credit limit, which is usually a percentage of your credit limit.
Cash advances might be a convenient option to get access to cash, but they are costly. This is because the fees are charged upfront and could go up to 6% on the advanced amount even before incurring interest. Any additional outstanding due will incur a interest rate of 24-29% p.a. Comparing it to a personal loan, processing fees are at 1% before cash rebates and interest rates are at 7-15% p.a. (effective).
With a cash advance on a credit card, there is absolutely no delay in sanction, as one can just walk up to an ATM and withdraw the money. In case of an emergency, the money can be accessed from far-off areas without having to go to a bank. A personal loan, however, might take anywhere from one day to several weeks. It depends on several factors, like your credit score and where you get your loan from. Still, you should always make a personal loan application first as most banks have instant approval functionality that can disbursed cash into your account upon submission.
The amount a borrower can get through a personal loan is much higher than a credit card cash advance. In many cases, a bank will allow you to take out a personal loan for up to 6–18 times your monthly income, depending on certain factors in your finances.
If you can wait a day or two, personal loans are the better option to finance your emergencies compared to cash advances. Considering the lower interest rates and monthly payments, personal loans are a much better tool than cash advances on credit cards to finance emergencies that require a huge amount of money.
If you’re looking for extra cash to finance your emergencies, we have a digital personal loan application tool that allows you to search for the right personal loan that you need for free. We connect borrowers with leading banks and financial institutions to compare the best personal loan offers.
If this is your first time planning to apply for a personal loan, make sure you read our guide and know why you should only get a loan from a licensed moneylender – not a loanshark – and how to tell the two apart.
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