A credit card cash advance allows you to withdraw cash from your credit card account, often through an ATM or bank teller. While it might seem like an easy way to get quick cash, it comes with specific limits and restrictions that every cardholder should understand before using this feature.
Understanding Cash Advance Limits
Your credit card cash advance limit is usually different from your overall credit limit. For example, if your total credit limit is $5,000, your cash advance limit 신용카드 현금화 might only be $1,000 or less. This separate limit is set by your credit card issuer to reduce risk, as cash advances are considered high-risk transactions due to their immediate nature and lack of a grace period.
Restrictions on Withdrawals
Even within your cash advance limit, there may be additional restrictions. Many banks set daily withdrawal limits, especially for ATM transactions. You may also face a minimum withdrawal amount. Furthermore, some types of transactions, like purchasing foreign currency or using convenience checks, may be counted toward your cash advance balance.
Higher Interest Rates and No Grace Period
One of the most important restrictions is the cost associated with cash advances. Unlike regular credit card purchases, cash advances start accruing interest immediately—there’s no grace period. Interest rates for cash advances are typically higher than purchase rates, which means the debt can grow quickly if not repaid promptly.
Additional Fees
Besides interest, most credit card issuers charge a cash advance fee, often a percentage of the withdrawn amount (e.g., 3%–5%) or a fixed fee, whichever is higher. These fees are applied immediately, adding to the overall cost of borrowing.
Foreign Transaction Considerations
If you take a cash advance abroad, you might face extra charges such as foreign transaction fees and currency conversion fees. Combined with high interest rates, these costs can make overseas cash advances particularly expensive.
Bottom Line
Credit card cash advances can be helpful in emergencies, but the limits and restrictions mean they should be used with caution. Understanding your cash advance limit, the fees involved, and the absence of a grace period can help you make more informed financial decisions. Whenever possible, consider alternative sources of funds that offer lower interest rates and fewer fees.