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Four Things to Look Out for Before Committing to a Cash Advance

We can’t always predict what happens in life. Whether it’s medical emergencies, job losses or property damages, unpredictable obstacles are inevitable and the financial consequences can be severe. When the unexpected happens, a little financial support can go a long way, which makes cash advances particularly appealing. 

Cash advances provide quick access to money without needing to apply for a formal loan. When dealing with an unexpected hurtle or struggling to make it to your next paycheck, getting an advance is an efficient way to receive extra cash in a bind. However, many people don’t realize that making a cash advance transaction is often outrageously expensive and can leave you in an even worse financial situation than before. Before committing to a cash advance, make sure you know what you’re signing up for. 

What to Consider When Getting a Cash Advance 

If you’re in need of an advance, it is essential that you understand the associated costs, as they are not always clear. Here's what to keep in mind:

  1. High interest rates: Interest rates, the amount charged on top of the principal by a lender, are typically higher for cash advances. For most credit cards, cash advance interest rates range from 17.99 percent to 29.99 percent annual percentage rate (APR), a steep rate that can sneak up on you if you’re unprepared. 
  2. Fees: On top of high interest rates, there are also often costly up-front fees, which typically range from 3 percent to 8 percent, or 5 to 12 dollars. For example, if you take out a $200 cash advance, an additional fee of $6 to $10 will be added to your account balance. Be aware of flat fees that get tacked on to your advance.  
  3. No grace period: A grace period is the time between the end of a credit card's billing cycle and when the next payment is due. When it comes to cash advances, most credit cards do not offer this grace period, which means you will begin paying interest from the day you take out the advance — there is no delay in getting charged. 
  4. Hidden costs: On top of high interest rates and added fees, there can be other costs to be aware of. For instance, banks and ATMs may charge a separate fee on top of the credit card company's fees. Additionally, if you are more than 60 days late on a payment, your provider could apply a penalty APR fee. 

Get a Free Cash Advance with Klover 

Without proper due diligence, the high interest rates and pricey fees that come with cash advances can take you by surprise and impact your financial standing. Consider a cash advance option that has zero interest rates or fees, like Klover. Just by linking your bank account and verifying your paycheck, Klover provides access to a free cash advance in seconds in exchange for an asset you might not even know you can control - your data. 

To avoid paying an arm and a leg, be sure to exhaust all your cash advance options and opt for whatever will cost you the least in the long run. 

Josh Lamb
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