Cash Advances

Explore and apply for cash advances through zaving, helping you cover unexpected expenses quickly.

Last updated by Zaving Editorial Team, on January 19th, 2024

Are you curious about cash advances? If you need some urgent cash to get you through a tight spot, you can turn to zaving to help you explore your options. Our online service makes applying for a loan quick, easy, and hassle-free. If your loan is approved, cash can land in your bank account straight away – it's as simple as that! Start the application process right here today with zaving.

What are cash advances and how do they work?

“Cash advances are short-term loans offered by credit card issuers or some financial institutions. They enable cardholders to withdraw cash against their credit limit from ATMs or through bank withdrawals. The process typically incurs immediate interest charges, usually at higher rates than standard credit card purchases.

When you obtain a cash advance, you're borrowing against your credit card's available balance. Unlike regular credit card purchases that come with a grace period before interest accrues, cash advances often start accruing interest immediately. The amount you can withdraw depends on your credit limit and the cash advance limit set by your card issuer.

Additionally, cash advances often come with additional fees. These fees can include ATM fees, cash advance fees (typically a percentage of the amount withdrawn), and potentially higher interest rates compared to regular credit card transactions.

It's important to understand that cash advances are generally considered costly options due to their higher fees and immediate interest accrual. They should be used sparingly and for urgent needs only due to their higher costs compared to other forms of borrowing.”

How are cash advances different to payday loans?

“Cash advances and payday loans both offer quick access to funds, but they differ in some key aspects:

  • Source of funds: Cash advances are generally linked to a credit card and allow cardholders to withdraw cash against their card's credit limit. On the other hand, payday loans are small, short-term loans from specialized lenders and typically based on the borrower's income.
  • Repayment structure: Cash advances from credit cards are generally repaid monthly alongside the credit card balance, subject to the card's terms and interest rates. Payday loans, however, are repaid as a lump sum, usually on the borrower's next payday, often with higher fees and interest rates.
  • Interest rates and fees: Cash advances carry higher interest rates than standard credit card purchases, typically ranging from 25% to 30% APR, but payday loans have significantly higher interest rates, often reaching 400% APR or more, and additional fees.
  • Regulation: Cash advances are subject to credit card regulations and agreements. Payday loans are governed by specific state and federal regulations, but often less stringent than credit card regulations.
 

Ultimately, the best option for you depends on your specific needs and financial situation.”

Can cash advances affect my credit score?

“Cash advances might not directly impact credit scores unless mishandled. When you withdraw cash from a credit card, it doesn't impact your credit score immediately, as it's part of your available credit limit. However, it can affect your credit utilization ratio, which could impact scores indirectly.

The real risk lies in repayment. If you fail to repay on time or carry high balances for an extended period, it could hurt your credit score. Moreover, some lenders offering cash advances might report to credit bureaus, especially if the debt goes into collections, further affecting your score.

Also, applying for multiple cash advances within a short period might signal financial stress, resulting in hard inquiries on your credit report, which can temporarily impact your score.

Therefore, while cash advances might not directly hurt your credit score, mismanaging them or carrying debt for too long can negatively affect your creditworthiness.”

More of your frequently asked questions about payday loans

Are there restrictions on how I can use a cash advance?

Yes, there can be restrictions on how you use a cash advance. While specific limitations may vary depending on the lender, some common restrictions include caps on withdrawal amounts (often a percentage of your credit limit or a fixed maximum) and prohibitions on certain activities like gambling or purchasing investments. You can typically use a cash advance for various purposes like covering immediate expenses, bills, or emergencies. However, it's wise to avoid using it for non-essential expenses due to the high-interest rates associated with cash advances, which can lead to financial strain if not repaid promptly.

Can I get a cash advance if I have bad credit?

Yes, it's possible to get a cash advance even if you have bad credit, but it might be more challenging. Some lenders may still offer cash advances to individuals with bad credit, but they might impose stricter terms, higher fees, or lower borrowing limits. Additionally, certain alternative lenders or payday loan providers may consider your application regardless of your credit score. However, it's crucial to be cautious, as these options often come with substantially higher interest rates and fees, potentially exacerbating your financial situation if not managed responsibly.

Can I pay off a cash advance early without penalties?

The ability to pay off a cash advance early without penalties depends on the terms set by your lender. Some lenders allow early repayment without penalties, enabling you to save on interest by paying off the advance sooner. However, it's essential to review the terms and conditions of your specific cash advance agreement, as certain lenders might impose prepayment penalties or fees for early repayment. Contacting your lender or reviewing your agreement will provide clarity on whether you can settle the cash advance early without incurring additional charges.

What are the rates and fees associated with cash advances?

Cash advances come with fees and higher interest rates compared to regular credit card purchases. Typically, you'll face an upfront fee of 3-5% of the withdrawal amount, with interest rates ranging from 25-30% APR, depending on your creditworthiness and lender. Be aware that these charges can quickly add up, making cash advances a costly option.