Whether you run a small business or own a large corporation, staying up-to-date with the market trends is essential to remain competitive. In recent times, you have probably come across the idea of borrowing cash through a credit card, deducted from a credit limit. Your credit card may allow you to get a short term loan against the credit line on your credit card. Let us dig a little deeper into how that works.
What Is a Cash Advance?
The cash advance facility is like withdrawing cash from an ATM with your bank card. The only thing differs the money comes from your credit limit, which you will have to pay back with interest.
Moreover, the process for a cash advance is similar to making a transaction through your debit card; especially when using a portable cash machine. You will need to enter your PIN code at a cash machine to take out a cash advance.
While many people may confuse cash advance through credit card with a payday cash advance loan, keep in mind that payday cash advance does not require a credit check. On the other hand, your credit card cash advance will need a credit check to approve the transaction. A cash advance provides you with an option to use your credit card for a short-term loan at an ATM or bank.
In other words, unlike your debit card transaction, you will need to pay back the cash you got from your credit card. Although cash advance is a convenient option for the ones who need a short-term loan, it can be quite expensive since cash advances need to be repaid-with interest. Moreover, it is one of the most costly credit card transactions.
How Do Cash Advances Work?
Many people prefer to carry credit cards only. However, if you are one of them, you might have faced a situation where you badly need cash in hand to make a purchase, such as buying vegetables at a market or food from a street vendor. Well, a cash advance can be the most convenient option in such a situation.
If you have a PIN code on your credit card, you can quickly get cash advance from a portable cash machine. Otherwise, you can visit a bank that provides cash advances on your credit card’s payment network, like Visa or MasterCard. However, you will have to show your ID to the concerned personnel to get cash advance.
Many credit card companies do not allow their customers to utilize the entire credit limit for cash advances. Most of them allow credit cardholders to withdraw a few hundred dollars. Therefore, you cannot rely on your credit card in case of an emergency, when you may need a large amount of cash.
Why is Cash Advance an Expensive Option?
No doubt, getting a cash advance is very convenient and easy, but it is one of the most expensive ways to have cash on your hands. As mentioned before, cash advances come with a massive list of expenses.
These include the fees for the facility that a card issuer may impose. Some cards charge $5 to $10 per cash advance, whereas others may charge a certain percentage of the advanced amount. Other than this, you will have to pay ATM or bank fees and interest on cash advances.
The Main Takeaway
The costs associated with credit card cash advance are huge. Therefore, cash advances must be used only in specific situations. In other words, it is better not to rely on cash advance since it provides cash of a certain percentage of your credit line. Still, many people may consider utilizing their credit card for a cash advance.
Therefore, no matter the type of business you deal in, installing MOBILEMONEY’s ATMs or CASINOMONEY's Ticket Redemption Machines will allow you to provide your customers with secure cash advance solutions & cage solutions. Note that, an ATM business will help generate foot traffic along with passive income for your business, casino or card-room.