How Cash Advance Works For Business People

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When you have an unexpected need for cash for your business that your bank cannot meet, one way to get some extra cash is to get a cash advance on your business credit card. A cash advance is essentially a loan that is advanced on a credit card. It’s a short-term loan, and there are various ways in which businesses can get one. However, this kind of credit can be expensive, and it’s only good if you can use it to pay for business emergencies.

Read on to find out why businessmen use cash advance and how it works in general.

How a cash advance works

Most business credit cards can allow you to take some money and pay it back with some interest. Every card has a limit, and this limit may vary from one business to another. The lender can advance you up to a maximum of the card limit. Which is not the same as your credit limit? Your credit card company should be able to tell you what your credit card limit is.

Anytime you take an advance on your credit card, this amount is added to the accrued balance on your credit card until you pay it. The APR that you get charged for an advance may be a little higher than what you could be charged for asset financing or a personal loan. You should be able to know about this when signing up for a cash advance with your preferred lender.

Ways to obtain a cash advance.

1. In person

This is where you go with the credit card to a credit union or to your bank and request cash advance. The bank may charge a fee, which is different from what your credit card issuer charges you.

 2. At the Automatic Teller Machine

You can visit an ATM with your card anytime, insert it, enter your PIN and get the cash. But remember that there is a limit on how much you can withdraw every day, so this can work better if the amount that you want is below that limit.

3. Online

If you have an account with the bank that issued your credit card, you can ask them for help in transferring the money to your bank account. These days, you can also use the bank’s mobile app to make such requests.

4. Convenience checks

A few credit card issues offer convenience checks that can be used by those who are interested in cash advances. You can write a check for the amount that you want and then deposit it in a bank or a credit union.

Does cash advance impact your credit score?

A cash advance is not always visible in your credit history, so there is no way it can have an effect on your credit score. However, a cash advance is added to your credit card debt, which may push your credit utilization higher, hence hurting your credit score. A high credit utilization ratio of more than 30% is considered unhealthy.

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