Cash Advance

A cash advance is a service provided by financial institutions that allows a cardholder to withdraw a portion of their available credit line in the form of cash. This can be done through a bank teller or an Automated Teller Machine (ATM). Cash advances are typically accessed using a credit card, and unlike regular credit card purchases, they often incur additional fees and higher interest rates from the moment of withdrawal.

Cash advances do not have a grace period, meaning interest begins accruing immediately, unlike standard credit card transactions which may have a grace period before interest is charged if the balance is not paid in full. The fees associated with cash advances may include a flat rate or a percentage of the amount withdrawn, making it a more expensive option compared to traditional credit purchases.

This financial tool is useful in situations where liquid cash is immediately required, but it should be used sparingly due to the high costs associated. Understanding the terms and conditions, including the interest rate and fees before taking a cash advance, is crucial to manage financial health and avoid excessive debt accumulation.