Cash advance
Encyclopedia
A cash advance is a service provided by most credit card
and charge card
issuers. The service allows cardholders to withdraw cash
, either through an ATM or over the counter at a bank or other financial agency, up to a certain limit. For a credit card, this will be the credit limit (or some percentage of it).
Cash advances generally incur a fee (to replace the interchange fee
normally charged to the merchant on a card transaction), although this is sometimes waived if the account is in credit. When made on a credit card, they are usually charged at a higher rate of interest
than store purchases, and generally do not attract an interest-free period
which is customarily given to cardholders who pay off their bill in full every month.
Some "purchases" made with a credit card of items that are viewed as cash are also considered to be cash advances in accordance with the credit card's guidelines, thereby incurring the higher interest rate and the lack of the grace period. These often include money order
s, lottery
tickets, gaming chips, and certain taxes and fees paid to certain governments.
Under card scheme rules, a credit card holder presenting an accepted form of identification must be issued a cash advance over the counter at any bank which issues that type of credit card, even if the cardholder cannot give his or her PIN
.
Credit card
A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services...
and charge card
Charge card
A charge card is a card that provides an alternative payment to cash when making purchases in which the issuer and the cardholder enter into an agreement that the debt incurred on the charge account will be paid in full and by due date or be subject to severe late fees and restrictions on card...
issuers. The service allows cardholders to withdraw cash
Cash
In common language cash refers to money in the physical form of currency, such as banknotes and coins.In bookkeeping and finance, cash refers to current assets comprising currency or currency equivalents that can be accessed immediately or near-immediately...
, either through an ATM or over the counter at a bank or other financial agency, up to a certain limit. For a credit card, this will be the credit limit (or some percentage of it).
Cash advances generally incur a fee (to replace the interchange fee
Interchange fee
Interchange fee is a term used in the payment card industry to describe a fee paid between banks for the acceptance of card based transactions. Usually it is a fee that a merchant's bank pays a customer's bank however there are instances where the interchange fee is paid from the issuer to...
normally charged to the merchant on a card transaction), although this is sometimes waived if the account is in credit. When made on a credit card, they are usually charged at a higher rate of interest
Interest
Interest is a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets. It is most commonly the price paid for the use of borrowed money, or money earned by deposited funds....
than store purchases, and generally do not attract an interest-free period
Grace period
A grace period is a time past the deadline for an obligation during which a late penalty that would have been imposed is waived. Grace periods, which can range from a number of minutes to a number of days or longer, depending on the context, can apply in various situations, including arrival at a...
which is customarily given to cardholders who pay off their bill in full every month.
Some "purchases" made with a credit card of items that are viewed as cash are also considered to be cash advances in accordance with the credit card's guidelines, thereby incurring the higher interest rate and the lack of the grace period. These often include money order
Money order
A money order is a payment order for a pre-specified amount of money. Because it is required that the funds be prepaid for the amount shown on it, it is a more trusted method of payment than a cheque.-History of money orders:...
s, lottery
Lottery
A lottery is a form of gambling which involves the drawing of lots for a prize.Lottery is outlawed by some governments, while others endorse it to the extent of organizing a national or state lottery. It is common to find some degree of regulation of lottery by governments...
tickets, gaming chips, and certain taxes and fees paid to certain governments.
Under card scheme rules, a credit card holder presenting an accepted form of identification must be issued a cash advance over the counter at any bank which issues that type of credit card, even if the cardholder cannot give his or her PIN
Personal identification number
A personal identification number is a secret numeric password shared between a user and a system that can be used to authenticate the user to the system. Typically, the user is required to provide a non-confidential user identifier or token and a confidential PIN to gain access to the system...
.