Emergency financial scenarios can happen at any time to almost anyone. Your house needs an unexpected repair or you get into a car accident. Even unplanned medical bills can create an immediate need for funding you don’t have access to.

If you find yourself in need of urgent cash, there are a couple of resources you might think to turn to for help. Options including payday advances or personal loans may seem less convoluted than another choice you already have access to – your credit card.

Getting cash from your credit card in the form of a cash advance is a relatively easy process that may only require a call to your bank and access to an ATM. But is it worth it?

To help you make the best financial decisions in this time of need, we’re going to lay out everything you need to know about getting cash from credit card withdrawals. We’ll also include some alternative options and ways you can avoid making costly mistakes.

How Does It Work?

When you use your credit card to withdraw cash from an ATM you’re technically entering into a short-term loan agreement with your credit card company. Getting cash from credit card withdrawals may seem like an easy solution if you’re in need, but it can be more complicated than that.

First, you need to make sure your credit card has a pin number associated with it. This isn’t always automatic and may require a phone call to your lender to set one up. As a formality, your bank may also want to cover the procedure for (and cost) of using your credit card for cash withdraws.

The amount you can withdraw is typically limited to your total available credit (though may sometimes be less).

All of that may sound straightforward on the surface, but it can get more complicated when you realize how much that cash advance is really costing you in the end.

How Much Will a Cash Advance Really Cost You?

Financial experts say you should only get cash from your credit card in the event of a true emergency. While tempting, it’s important to recognize exactly how much you’ll be paying the credit card company back for that advance.

Every credit card has a standard interest rate, but the interest you pay on a cash advance can be different, and in most cases, even higher. The standard grace period you typically get when shopping with your credit card is also lost on these transactions. Because the interest begins accruing immediately, it’s very important to know what your cash advance interest rate is before heading to the ATM.

Which brings us to our next set of unexpected expenses: fees. There are two major sets of fees you should be aware of in order to understand just how much a credit card cash advance really costs:

  • Cash Advance Fees
  • ATM Fees

Virtually every credit card company will charge you a fee for using your credit card for cash advances. This fee is typically a set amount that’s charged to you immediately.

In addition, you may also be charged an ATM fee, especially if you aren’t using an ATM designated by your bank. This fee is also charged to you immediately.

How To Avoid Getting Cash From Credit Card Withdrawals

Because a financial emergency can happen at any moment, it’s important to have a plan when these unexpected needs arise. This can come in the form of a savings account you contribute to on a routine basis. Backup cash is another option for avoiding unnecessary expenses like those from getting cash from credit cards.

Finding yourself in need of cash doesn’t always have to be an “emergency.” You might be at a farmers market or restaurant where you can only pay with cash. Or perhaps you need to tip the valet driver but you don’t have cash on hand.

In any of these scenarios, using your credit card might seem like an easy option. Still, knowing the expenses in advance might help you prepare better for the future. If you find yourself in need of cash with no other options, there are other solutions that might not cost you as much in the long run.

What to Do in an Emergency

For true emergencies where you might need a relatively large cash advance, you might need to consider your loan options. Thankfully, there are other choices besides getting cash from your credit card.

Quick loans and same day loans are one option. While typically still associated with a higher premium, you may have access to more cash at a lower rate rather than you would with a credit card.

If you have a high enough income but perhaps not the best credit, an unsecured personal loan might work better for you. If you have someone that can help cosign on the loan for you, that might help increase the amount you qualify for or lower the interest rate on the loan.

In both cases, these solutions can help expand your options in a time of need. If you need a larger sum of cash, the high-interest rate associated with most credit card cash advances can get pricey. Loan options help you avoid the costs (and the fees) associated with getting cash from credit card withdrawals.

Your Financial Resource

Whatever your financial need is, Bonsai Finance will help you find solutions that work. From personal loans for bad credit to unsecured and payday loans, we’ll help you find the cash you need at a rate that works.

In some cases, paying off a big purchase with a loan can make more sense for consumers than using a credit card – even if you aren’t using it as a cash advance!

Bonsai Finance can also help you with student loans and debt consolidation. Personal finance can be tricky and complicated. At Bonsai Finance, our goal is to help you understand all of your options to set you up for financial success!

To request your loan today, visit us online now for more information.