LOS ANGELES, January 26, 2021 (Newswire.com) - Your debit card is more than just a means to make purchases. It's a form of identification, an ATM card, and a convenient way to store a cash reserve fund. On top of all of that, a debit card can also be used for a cash advance.
To be clear, we're not talking about withdrawing funds from the ATM. Doing that is fairly common. The cash advance option is for when you need additional funds and you do not want to get that money from your bank account. It's still possible to get more funds with a debit card cash advance.
How debit card cash advances work
Your debit card has a Visa or Mastercard logo on it for a reason. Being part of either network makes the issuing bank a recognized entity anywhere these brand names are accepted, including banks and credit unions in the United States and abroad.
Let's say that you're traveling out of state and need cash. You take out your daily limit, typically anywhere from $300 to $1000, but you're still short. You have no checks on you and most banks usually require you to open an account to cash one anyway.
Enter the debit card. Walk into a financial institution, present the card, and ask for a cash advance. As long as you have the funds to back it up, you should be able to get the extra cash you need. The transaction is processed the same way as a credit card cash advance.
Debit card vs credit card cash advances
Why wouldn't you just use your credit card for a cash advance? Credit card issuers have been known to charge fees from 25% to 29% for a cash advance. That's a hefty fee, especially when you consider that interest on that borrowed money is due on top of that.
Major banks may charge $10 or less on debit card cash advances. You may also be able to get a debit card cash advance or debit card loan at other financial institutions such as loan companies. Check with your local options for rates and availability, especially if you plan on traveling outside your bank's coverage area.
Debit card cash advances are a great option, but they're not available everywhere. Some financial institutions don't allow debit card cash advances at all. You can still withdraw from an outside ATM, but you'll be limited on the amount you can pull out per day.
Paying cash vs paying with a debit card
Why not just pay with your debit card? In some businesses, cash is still king and you may find stores that don't accept debit cards.
Using your debit card like cash can also be dangerous when traveling internationally, as fraudulent debit charges may be difficult to recover.
When you use a credit card, you can always dispute a charge and the credit card company will remove it. With a debit card, the money is already gone, and you have to fight with the bank. Taking a debit card cash advance and paying cash to complete the transaction is safer.
Notice: Information provided in this article is for informational purposes only. Consult your financial advisor about your financial circumstances.
Source: iQuanti, Inc.