People who have credit cards can get cash advances when they borrow money against their credit lines. It may not be the cheapest way to get a loan, but it is among the easiest.
Because they tend to come with higher interest rates and fees, it’s important to understand how credit card cash advances work before getting one. We’ll talk about how credit card cash advances work and what you should know before you make one in this article.
A cash advance allows you to borrow money against the limit on your credit card. It can provide quick access to cash in an emergency. But can a cash advance be done over the phone? Here is a comprehensive guide to everything you need to know about getting a cash advance over the phone.
What is a Cash Advance?
A cash advance is essentially a short-term loan that allows you to borrow money up to a certain percent of your available credit limit on your credit card, The money can be withdrawn as cash or transferred to your bank account
For cash advances, you have to pay a fee, which is usually 3% to 5% of the amount you borrow, and the interest rate is higher than for purchases or balance transfers on your card. Cash advances don’t come with a grace period, so interest starts to build up right away.
How Do You Get a Cash Advance?
There are several ways to access the cash from your credit card cash advance
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At an ATM: If your credit card has a PIN, you can use it to withdraw cash from an ATM, up to your cash advance limit.
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At a bank: If you show your card and ID at a bank branch, you can get extra cash.
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Online transfer Some card issuers may allow you to transfer funds from your credit card to a linked checking or savings account,
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Convenience checks: Issuers sometimes provide convenience checks that can be used to access your credit line.
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Over the phone: In some cases, card issuers may permit cash advances by phone.
Can a Cash Advance be Done Over the Phone?
While it is possible to do a cash advance over the phone in some cases, most issuers no longer allow it due to the risks involved. Cash advances over the phone are considered high-risk for a few key reasons:
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Fraud risk: It’s easier for fraudsters to impersonate cardholders and get cash advances by phone.
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Chargeback risk: Cardholders can dispute phone cash advances they didn’t authorize, leaving the issuer liable.
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Identity theft: Phone cash advances make it easier for thieves to access funds if they steal card information.
This is the reason why most big credit card companies no longer let you get a cash advance over the phone. Some smaller issuers, on the other hand, still let it happen in some situations.
How to Get a Cash Advance by Phone
If your card company does let you get a cash advance over the phone, here’s what you can expect:
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You will need to provide personal information to verify identity, including SSN, date of birth, address etc.
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The issuer will likely ask for additional authentication, such as security questions or one-time passcodes.
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The funds may be transferred to a linked checking account, or made available for in-person pickup.
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Limits on maximum amounts per day/month often apply, usually a few hundred dollars.
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Interest starts accruing immediately, and fees apply.
Overall, getting a cash advance by phone is not very common anymore. Most major issuers like Visa, Mastercard, Amex and Discover no longer offer it due to the risks and liability involved. But it can still be an option with some smaller credit card companies.
Pros and Cons of Cash Advances by Phone
Pros
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Quick and convenient access to emergency cash.
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Don’t need to visit an ATM or bank branch.
Cons
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Very high interest rates and fees.
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No grace period, interest starts immediately.
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Counts toward credit utilization, can impact credit score.
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Some fraud/identity theft risks.
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Most major issuers no longer allow it.
Alternatives to Cash Advances
Because of the downsides to credit card cash advances, you may want to consider some alternatives when you need emergency cash:
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Personal loans – Unsecured loans from banks, credit unions or online lenders. May have lower rates than cash advances.
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Credit line – revolving credit from your bank at lower interest rate.
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401(k) loan – Can borrow against your retirement plan.
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Paycheck advance – Some employers provide advance on your paycheck.
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Borrow from family/friends – If possible, borrow from people you know.
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Credit card purchases – Use your card to pay directly for expenses if possible.
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High-yield savings – Keep an emergency fund in savings account.
The Bottom Line
While it is possible to get a cash advance over the phone in limited cases, it is an extremely high-cost way to borrow and now very uncommon due to fraud/theft risks. Before considering a phone cash advance, always explore other lower-cost borrowing options first, and use cash advances only as an absolute last resort in an emergency. Proceed with caution, because the fees and interest charges add up quickly.
Paying off your balance and making on-time payments
A cash advance starts incurring interest immediately. The sooner you pay it off, the less youll owe, so its generally best used as a short-term loan. Be sure those payments are on time to avoid late fees and additional interest.
A cash advance on a credit card counts against your credit utilization ratio. This calculation looks at how much credit you have available and how much of it you are using. It can impact 20% to 30% of your credit score, depending on the model being used.
This is because lenders usually want to see a 30% credit utilization ratio on unsecured loans like credit cards. If your ratio is less than favorable, it could make it harder for you to get a car loan or mortgage.
Generally no application or additional credit check
As we noted earlier, the credit card issuers have already decided youre a good risk by giving you a credit card in the first place. So, you already have the capacity to borrow these funds without any additional red tape.
Collateral is an asset that a borrower uses to secure a loan and a lender uses to reduce risk. It can be a physical asset, such as a car or house, or a financial asset. With a credit card advance, the credit card itself is the lenders guarantee of repayment.
A credit card cash advance can help you with debt management, but it’s generally prudent to use this option carefully and pay it back as soon as possible.
What Happens If You Don’t Pay Back a Cash Advance?
FAQ
Can I do a cash advance over the phone?
Can a loan be done over the phone?
Borrowers can apply for a loan over the phone using a mobile or landline phone and usually only need a few items, such as proof of ID, income, active bank account, an active email (may vary by lender), with many lenders offering quick funding—even same day.
What is the easiest way to get a cash advance?
At an ATM: If you have a PIN for your credit card, you can go to an ATM and get a cash advance. If you don’t have a PIN, you can request one from your card issuer. Keep in mind that getting a PIN might take a few business days, and most ATMs have limits on how much cash you can take out.
What are the rules for cash advance?
When you take out a cash advance, you’re borrowing money against your card’s line of credit. You must repay this loan and the amount you transfer cannot exceed the current balance available on your credit card. The amount of the cash advance is then added to your credit card balance.