The process of cash withdrawal with the help of a credit card is known as a cash advance. Although easy, yet cash advance Singapore should only be available after you have exhausted all other methods of getting cash including a savings account. This is because a cash advance usually comes with a high rate of interest which is charged as soon as money is withdrawn. Hence, you are not left with any short-term benefit as with a savings account.
So, if you are not aware of how credit card cash advance works. We are here to help. Let’s have a look.
How Cash Advance Works?
Cash advances are easy and can be availed by using an ATM, a convenience check, or a bank teller. If you wish to use an ATM, you will be needing a PIN. Should you don’t have a PIN, you can get it set from your bank provider. Once you have the PIN, the process of withdrawal is the same as with debit cards.
Secondly, as mentioned earlier, you can also use a convenience check for a cash advance. You must have received these cards along with your credit card from your bank provider. These can be used similarly to ordinary bank checks. Here, you need to check if your convenience check is attached with any offer. Usually, credit card companies send convenience checks with special offers to their customers. If you notice any offer such as 0% APR for 5 months, do not use the check.
How Much Money Can You Withdraw Using a Cash Advance?
The amount depends on your credit card company as well as your FICO scores. So, the higher your FICO scores, the more money you can withdraw using a cash advance. However, the highest amount withdrawn is equal to your credit limit minus the cash advance fee. Usually, different banks have different cash credit limits which you will need to check before making a withdrawal.
Important Things to Know About Cash Advance Singapore
● How Funds are Applied?
Whenever you make any payment whether minimum or maximum, the funds are applied to your purchases. This usually happens because most credit card issuers direct minimum payments towards items accumulating lower interests. By the rule, you cannot target items while making your purchases. Similarly, you cannot request funds to pay off your cash advances before your purchases.
Nevertheless, the law states that any payment that surpasses the minimum amount has to be applied to the highest APR balance. So, if you need a cash advance urgently, your next payment should be the minimum along with the cash advance. This way, you will pay the debt easily.
● What About Special Purchases?
You need to make certain purchases diligently as compared to others. This is because most of the banks consider certain purchases as cash advance Singapore whether you didn’t take out money from the ATM or a convenience check. Here are the purchases that are regarded as cash advances:
• Lottery tickets
• Cash equivalent purchases on PayPal
• Traveller’s checks/money orders
• Foreign currency
• Casino gambling chips
Sometimes transferring funds to a PayPal account may be considered as a cash advance. This applies when you use PayPal to buy certain items such as gift cards that are categorized as “cash equivalents”.
● How to Find Information?
Now, as mentioned above, the banks have different sets of rules in Singapore concerning credit cards. The entire essence lies in following the specific guidelines which you get along with your credit card and understand their rules about cash advances. Such terms and conditions are usually updated. Hence, make sure to go through them carefully before withdrawing a cash advance.
Pros of Cash Advance
● The biggest advantage of cash advance is that you get instant access to money whenever you need it.
● Secondly, credit is not a primary factor in approval for a cash advance. Even if you have limited funds on your credit card, you can still apply for new credit and take advantage of it.
● There is also no paperwork involved with a cash advance as with other methods.
● You don’t have to worry about collateral being seized.
Cons of Cash Advance
● The high rate of interest and prices are some of the primary drawbacks of cash advances. For instance, some payday loan providers even charge up to 15% of the total borrowed amount along with surplus interest which can even go up to as high as 100% or more of the borrowed amount.
● Secondly, another disadvantage of cash advance is that it is short-term financial aid. Having said that, you will be required to repay it quickly often within two weeks to avoid paying substantial penalties or filling the loan over with even larger interest rates.
● Also, if you use your credit card for repaying a loan, the problem of the high interest rates will still linger on all of your other purchases which will keep on reinforcing for months, years or even decades if not paid on time.
The banks and credit card companies usually charge high fees as well as the rate of interest for cash advances because of the obvious risks involved. Unlike secured loans, when you fail to pay off the debt, the credit card company cannot repossess the purchased item and recover the loss as no collateral is involved. Hence, the banks charge high fees and interest to mitigate the risks associated with a cash advance Singapore.
Therefore, it is recommended to use cash advance only in times of dire need. If you need financial assistance instantly, you can contact our team at On Line Credit Pte Ltd. We can help you in making the right financial decision as per your needs.
Contact us here – our team of experts will be happy to help you. We’ll learn about your financial needs and goals and help you make informed decisions. For faster response, please give us a call at 6445 9166.