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Cash Advance Formula:
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A cash advance is a short-term loan from a bank or alternative lender. It allows you to borrow money against your credit card's line of credit or through a payday loan service. Cash advances typically come with higher fees and interest rates than regular purchases.
The calculator uses the following formula:
Where:
Explanation: The calculator helps you understand the total cost of a cash advance by breaking down the principal amount, fees, and interest charges.
Details: Cash advances typically have higher costs than regular credit card purchases. They often include a transaction fee (usually 2-5% of the advance amount) and higher interest rates that start accruing immediately without a grace period.
Tips: Enter the advance amount, fee rate (as a percentage), annual interest rate (as a percentage), and the loan term in days. All values must be valid positive numbers.
Q1: What is the typical fee for a cash advance?
A: Most lenders charge between 2-5% of the advance amount as a transaction fee, with a minimum fee (usually $5-10) if the percentage calculation is lower.
Q2: When does interest start accruing on cash advances?
A: Unlike regular purchases that may have a grace period, interest on cash advances typically begins accruing immediately from the transaction date.
Q3: Are there limits on cash advances?
A: Yes, most credit cards have a cash advance limit that is typically lower than your overall credit limit, often around 20-50% of your total credit line.
Q4: What are alternatives to cash advances?
A: Personal loans, borrowing from friends or family, or using a credit card for purchases instead of cash advances often have lower costs.
Q5: How can I avoid cash advance fees?
A: The best way to avoid fees is to use other funding sources. If you must use a cash advance, repay it as quickly as possible to minimize interest charges.