Personal loans and credit card cash advance are the two most popular options that people will consider when they need a sum of money. Credit card cash advance means you are borrowing money with your credit card by withdrawing from the ATM. Credit card cash advance allows you to get the funds faster since you can immediately withdraw it from the ATM.
It will take some time for a personal loans to get approved and the funds to be wired into your bank account. The process of applying for a personal loan is more complicated than credit card cash advance. There are some financial documents that you have to provide when applying for a personal loan. The bank will take into account several factors before deciding to approve the loan amount you apply for.
Credit card cash advance is more expensive than personal loans. The interest of a credit card cash advance is about 20% – 30%. Getting a personal loan is much cheaper if you have an excellent credit score of above 700. With an excellent credit, you can qualify for a low interest in the personal loan. However, taking a personal loans can be expensive if you don’t have a good credit score.
The interest rate of a personal loan is half of the interest rate you are charged in a cash advance. There is a low limit on the amount of cash advance you can withdraw from the ATM. Besides the interest, you also have to pay the cash advance fee for every withdrawal. The cash advance fee can be as high as 5% of the withdrawn amount. There are some credit cards that allow you to take out cash advance without getting charged for a fee.
Most credit cards have a $5,000 credit limit but you usually aren’t allowed to withdraw the entire amount from the ATM. Your credit card company may limit you to withdraw only a few hundred dollars as cash advance from ATM. Credit card cash advance is meant to be used in case of emergency when you need the money immediately. Personal loans is more suitable if you are planning for a big purchase as you can borrow up to $25,000.
Credit cards cash advance has a shorter repayment period compared to personal loans. The interest rate starts to build up from the day you perform the withdrawal. Therefore, you have to repay back the amount as fast as you can otherwise it will get very expensive. On the other hand, personal loans has a fixed interest and it offers a longer repayment period of 3 – 5 years. It is less stressful to make the repayment for a personal loan than a credit card cash advance because you are given a longer time to repay it.