Are you considering a cash advance on your credit card? It’s not the best option … Cash advances have high APRs and come with high upfront fees. To administer a cash advance, your credit card issuer will charge you an upfront fee that ranges from $5 to $10 or 3% to 5% of the amount withdrawn. For example, if you take out a $500 cash advance on your credit card, you’re looking at $15 to $25 in upfront fees. As for APRs, they average around 24%, but some credit cards can have cash advance APRs upwards of 34.99%.
At ElitePersonalFinance, we only recommend cash advances as a last resort. If it’s an emergency and you’re in need of quick funds, a cash advance may be right for you. Just make sure you can pay off the balance in a short period of time.
If you have good credit, we recommend you stick to a personal loan. With plenty of reliable options and affordable APRs, check out our list of the best personal loans 2020.
Now, if you have bad credit, don’t get too discouraged. There are cheaper alternatives out there, and we’re here to help you find them.
Should I Consider A Bad Credit Personal Loan Or An Alternative Loan?
Before settling for a cash advance, you should try to apply for an unsecured personal loan or an alternative loan. These days many lenders offers loans for people with bad credit. Bad credit personal loans have APRs that range from 5.99% to 35.99%, while alternative loans have APRs that range from 35.99% to 400%. Bad credit personal loans often allow you borrow between $1,000 and $100,000, while alternative loans typically range from less than $1,000 to upwards of $5,000. The main purpose of alternative loans is to help borrowers with extremely bad credit. They’re designed for those who don’t qualify for a personal loan, but want to avoid the pitfalls of a credit card cash advance.
BadCreditLoans.com offer unsecured personal loans to borrowers with extremely bad credit. And like their motto states – they help when others can’t. While the company offers loans up to $5,000, those with really bad credit shouldn’t expect that much. Usually the lender will provide up to $1,500 if your credit is extremely poor, while those with higher credit scores can qualify for the full $5,000.
For those with extremely bad credit, APRs range from 20.00% to 35.99%, but approval is usually fast and easy. As well, loans are unsecured so you never have to worry about losing any collateral.
PersonalLoans.com offers bad credit personal loans ranging from $1,000 to $35,000 with APRs that range from 5.99% to 35.99%. As well, loan duration range from 90 days to 72 months.
To qualify for a personal loan though, you need to have some form of recurring income: full-time employment, self-employment, regular disability or Social Security benefits. Most applications are processed quickly and easily, however loan origination fees will apply in most cases.
Opploans.com is one of the most popular alternative loan companies and one we highly recommend. Loan amounts range from $1,000 to $4,000 and APRs range from 99% to 199%. Loan duration range from 9 months to 36 months and Opploans charges zero prepayment penalties.
As an added benefit, Opploans offers refinancing options to select borrowers. While eligibility is left to its discretion, if you qualify, you will see a ‘Refinance Now’ option in your customer portal. Through the link, you can request additional funds or reduce your monthly payments.
As of today, Opploans offers installment loans to residents in Alabama, California, Delaware, Georgia, Idaho, Illinois, Mississippi, Missouri, Nevada, New Mexico, South Carolina, Texas, Utah and Wisconsin. However, the company also offers loans through FinWise Bank – an entity Opploans contracts to handle certain loan products. These loans are available to borrowers in Alaska, Arizona, California, District of Columbia, Florida, Hawaii, Indiana, Kentucky, Louisiana, Maine, Michigan, Minnesota, Montana, Nebraska, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Dakota, Washington and Wyoming.
Last is its line of credit. This option is only available to residents in Kansas, Tennessee and Virginia.
Promising a $200 credit if you find a better rate from another competitor, Credible.com offers unsecured personal loans ranging from $1,000 to $100,000. Keep in mind though, loan amounts depend largely on your debt-to-income ratio and you’re also required to have steady income. As well, a loan origination fee of 0% to 8% can apply.
While each lender within Credible’s network uses its own proprietary method to determine rates, typical APRs range from 5.34% to 35.99%. Repayment duration range from 61 days to 120 months, but there are no hidden fees.
As another great source to find unsecured personal loans, LendingTree.com offers solutions to borrowers with credit scores as low as 500. Its APRs range from 3.99% to 35.99%, and you can qualify for loan amounts up to $50,000.
Citing recent examples, borrowers with credit scores greater than 700 received loan APRs that topped out at 11.95% – with the majority of loan APRs ranging from 3.99% to 5.74%. However – if you have bad to fair credit – the amount you receive will be much lower and your APR will most likely fall near the 35.99% mark.
Is It Ever A Good Idea To Take Out A Credit Card Cash Advance?
You should only use a credit card cash advance as a last resort. It’s an expensive form of borrowing, so we don’t recommend it as a primary option. However, if you have extremely bad credit and are struggling to qualify for one of the options above, a cash advance may be right for you. As well, if it’s an emergency and you need quick cash, it’s good to know a credit card cash advance is a possibility. But remember, before taking the plunge, make sure you can repay the proceeds in a short period of time. If not, interest charges will quickly add up.
Why Should I Avoid A Credit Card Cash Advance?
As we mentioned above, you should only use a credit card cash advance as a last resort. Another reason for this is when you make the minimum payment on a cash advance balance – instead of reducing your principal – the proceeds are first credited to your purchase balance. Because of this, your cash advance balance remains high and you incur more interest charges at the higher rate.
But, we understand, life can through you curveballs. And sometimes emergency funds are needed.
So, if you find yourself stuck and a cash advance is your only resource, we consolidated some of the best options to help you along the way. But keep in mind, while all of the credit cards in the table below have zero upfront fees, only one is available to borrowers with less than excellent credit. This is the DCU Visa Platinum Secured Card. It’s available to borrowers with bad credit, but it’s secured, so it requires a minimum collateral balance of $500. As well, all of the credit cards in the table below are issued by credit unions.
|Credit Card:||Annual Fee:||Purchase APR:||Cash Advance APR and Upfront Fee:|
|PenFed Platinum Rewards Visa Signature Card:||$0||11.99% to 17.99%||11.99% to 17.99% with no upfront fees.|
|PenFed Promise Visa Card:||$0||11.99% to 17.99%||11.99% to 17.99% with no upfront fees.|
|DCU Visa Platinum Rewards Card:||$0||13.50% to 18.00%||13.50% to 18.00% with no upfront fees|
|DCU Visa Platinum Secured Card:||$0||13.75%||13.75% with no upfront fees|
Best Cash Advance Credit Cards For Borrowers With Bad Credit
If you don’t qualify for any of the options above, the credit cards below are designed specifically for you. And while these options are more expensive, the approval rate is much higher if you have bad credit.
Capital One QuicksilverOne Cash Rewards
As another credit card option for borrowers with bad credit, Capital One’s QuicksilverOne credit card comes with a $39 annual fee. Capital One charges an upfront fee of $10 or 3% of the cash advance amount – whichever is greater – just to administer the transaction.
Total Visa Credit Card
As an even more expensive option for borrowers with bad credit, a Total Visa Credit Card requires an $89 Program Fee upon approval. For its cash advances, Total Visa APRs are a 34.99% and upfront fees are either $5 or 5% of the cash advance amount – whichever is greater. However, for the first year, there are zero cash advance fees as part of its introductory promotion.
Popular Credit Cards And Their Cash Advance Fees
Considering cash advance fees vary across credit card issuers, we wanted to consolidate some of the most popular credit cards in the marketplace to give you a sense of how the typical numbers play out.
Have a look at the table below:
|Credit Card:||Upfront Fee:||Cash Advance APR:||Min Credit Limit:||Annual Fee:||Min Credit Score:||Other Fees:|
|Chase Freedom:||$10 or 5% of the amount withdrawn (whichever is greater)||27.24%||$500||$0||680||Balance transfer ($5 or 3%), foreign transaction (3%), late payment (up to $38), returned payment (up to $38)|
|Chase Sapphire Preferred:||$10 or 5% of the amount withdrawn (whichever is greater)||27.24%||$5,000||$95||650||Balance transfer ($5 or 5%), late payment ($39), returned payment ($39)|
|Capital One Platinum:||$10 or 3% of the amount withdrawn (whichever is greater)||26.99%||$300||$0||650||Late payment (up to $39)|
|Discover it Secured:||$10 or 5% of the amount withdrawn (whichever is greater)||27.24%||$200||$0||Not Required||Balance transfer (3% during intro period, then 5%) Late payment ($0 for the first, then up to $39), returned payment (up to $39)|
|Capital One Journey Student||$10 or 3% of the amount withdrawn (whichever is greater)||26.99%||$300||$0||650||Late payment (up to $39)|
As you can see, some of the most popular credit cards have cash advance APRs that range from 26.99% to 27.24%. And while upfront fees are constant at $10 per issuer – as a percentage – these can range from 3% to 5% of the amount withdrawn. Moreover, all of the options above are accessible to those with fair credit scores, while the Discover it Secured Card is a great option if you have bad credit and are willing to put up collateral.
Should I Consider A Cash Advance App?
At ElitePersonalFinance, we highly recommend cash advance apps.
But don’t get the terminology confused. These are completely different than credit card cash advances.
See, cash advance apps offer a great way to tap into your employment earnings before you paycheck arrives. When you sign-up and clock-in using the apps below, the platforms track your work hours and allow you to withdraw funds instead of having to wait until payday. What’s great about the service is the companies below don’t charge any interest or fees. Rather than specifying a range of APRs or requiring upfront transaction fees, Brigit charges a $9.99 monthly subscription, while companies like Earnin allow you to donate whatever you think is fair.
As a great cash advance app for borrowers of all credit profiles, Brigit.com offers short-term loans up to $250. The company also charges no fees, interest or late payment penalties. Instead of applying a specific APR to each borrower, Brigit charges a $9.99 monthly membership fee, which allows full access to the platform.
True to its slogan of ‘Make Any Day Payday,’ Earnin.com acts as a bridge between money you’ve already earned but have yet to collect. Through its app, you can borrow up to $100 a day from your pending paycheck without incurring the exorbitant fees you see with credit card cash advances.
As another reliable cash advance app, Dave.com offers loans up to $75 and doesn’t charge any interest or fees. For compensation, the company charges a $1 monthly membership fee and also requires you to link your bank account to the service.
Here you can find our complete list of loan apps.
What Types of Loans Should I Avoid?
Without question, it’s payday and car title loans.
Payday loan, comes with an APR of 400%. With interest rates this high, you end up paying $45 in interest for every $300 you borrow – and that’s just over a two-week span. The Consumer Financial Protection Bureau (CFPB) also found that 20,000 bank account holders who made payments to online payday lenders incurred an average of $97 in overdraft and non-sufficient funds fees. The figure is nearly three times more than the $34 incurred by the average American.
Now for car title loans.
With car title loans things are similar. The difference is that you put your car as a collateral and if you can’t make a payment on time, the lender can get it.
Tips To Obtain The Most Affordable Financing
Remember, we don’t recommend alternative lenders as your primary source for a loan. We only recommend them as a way to avoid high-cost options – like a credit card cash advance. So, before you settle for either, read through our tips below and see if a more attractive option is available to you.
- Always apply for a bad credit personal loan. These days many lenders offer unsecured loans to borrowers with bad credit.
- Ask the lender why your application was rejected and work on that problem.
- Try secured personal loans.
- Next, move on to a co-signer loan.
- Try to improve your credit score.
- Use cash advance apps.
- Try credit unions; they typically require a one-time fee of $25, but their APRs tend to range from 18% to 28%; moreover, federal credit unions cap their APRs at 18%.
- Try make or save some money.
It’s a common misconception that if you have bad credit, you can’t qualify for an unsecured personal loan. Well, we’re here to tell you: it is possible, you just need to be persistent.
The lending market is an extremely competitive space and with plenty of companies fighting for your business, many lenders are willing offer unsecured loans to borrowers with bad credit. Moreover, with the modernization of credit analysis – instead of focusing solely on your credit score – lenders now take a holistic approach and examine your entire financial situation. Variables like your work history, education, spending activity and savings balance can all be used to overcome a bad credit score.
So, take our advice and avoid a credit card cash advance. The process is extremely cumbersome and can leave your finances in worse shape than where they started.