American Express Cash Advance – Use it or Disable the Feature
In addition to allowing you to make purchases, your American Express credit card comes with the ability to get cash. You might consider taking a cash advance if you’re in a pinch and don’t have enough money to cover your transaction. But, before you opt for a cash advance, know that it’s one of the most expensive credit card transactions you can make. You should consider all possible options, but sometimes it’s a good to have an emergency option available. If you’re an American Express customer and decide that’s the way to go, here’s how you can get an American Express cash advance. But first, clearly understand the fees and costs associated with this decision.
What is a credit card cash advance?
A cash advance using your American Express card means that you are borrowing cash against your credit limit instead of charging goods or services.
It’s like withdrawing money from the ATM with your debit card. However, unlike your debit card, the cash comes from your credit limit rather than your bank account balance. Unfortunately, credit card companies – including American Express, don’t treat these two types of transactions the same.
- Normal Credit Card Transaction – If you buy something with your credit card, you will be charged the purchase interest rate stated in your contract. However, American Express offers a grace period. So, you won’t start accruing interest on that purchase until your payment is due. In other words, as long as you pay your balance in full and on time each month, you might never have to pay interest on your purchases.
- Cash Advances – Work a little differently, though. Grace periods don’t apply. You’ll start accruing interest on the advanced amount as soon as you take the money out. Your credit card company will likely charge you a higher interest rate for cash advances than it does for normal purchases, plus a processing fee.
American Express Cash Advance – Costs and Fees
What to Consider before taking out a credit card cash advance
Before you take your credit card to the ATM for cash, consider that it is expensive. A credit card cash advance should generally be used as a last resort, and only in an emergency. With most cards, there is no grace period for cash advances. This means interest starts accruing as soon as you take the advance.
Also, be very careful when paying only the minimums when you have a cash advance. The CARD Act requires issuers apply only payments beyond the minimum payment to the highest interest portion of your balance. Depending on your balance, this means it can take a long time to pay off a cash advance if you’re only paying the minimum amount due each month. (Source: creditkarma.com)
How to get an American Express Cash Advance
If you ever decide to use the American Express cash advance feature, use the following steps to get cash advance:
- Create Your PIN – Call American Express customer service at (800) 227-4669 or visit your account online to create a credit card PIN number. You can then use that PIN at participating ATMs.
- Visit an ATM – The American Express Cash Advance program allows you to withdraw cash at participating ATMs. You can withdraw up to the available cash advance limit on the card account. The fee for a cash advance can be $5 or 3% of the transaction, whichever is greater. But some cards may set the dollar limit at $10 instead.
Express Cash allows you to use your Charge Card to withdraw cash from your designated bank account at participating ATM locations worldwide (visit www.amexatms.com to find the nearest ATM). You must be enrolled to use this feature. To enroll, call 1-800-CASH-NOW. Upon enrollment, we will send you a Personal Identification Number (PIN). You may change your PIN at any time. You must use your PIN along with your Card when withdrawing cash from an ATM. Upon enrollment, you will be asked to provide information designating the bank account that will be used for this service. When you withdraw cash at an ATM, your bank account will be debited the amount of the withdrawal (inclusive of any ATM operator or network fees) plus a fee of 3% of the total amount of your transaction or $5, whichever is greater.
Use these terms and conditions: Enrollment in Express Cash is required. There may be a delay between the date of your cash withdrawal and the date that the total amount of your transaction, including applicable fees, is debited from your designated bank account. American Express will impose limits on the amount of each cash withdrawal. Your bank or the ATM owner may also charge additional fees, including ATM and overdraft fees, and may impose its own limits on the amount of each cash withdrawal. By using Express Cash, you are indicating your acceptance of the terms of the Electronic Fund Transfer agreement, which is provided to you when you receive your Card. You will be provided with an additional copy if you enroll in Express Cash, and otherwise upon request. For additional information about this feature, please call 1-800-CASH-NOW. (Source: american express.com)
Pros and Cons of an American Express cash advance
- You get access to cash fast – Cash advances can be useful in emergencies when you are traveling or away from home. If you’ve exhausted all other options, you can get cash in a hurry when you really need it. All you need to do is head to the nearest participating ATM to get cash.
- High fees – Taking out a cash advance on your credit card is pretty straightforward, but it may not be the cheapest solution. Aside from the cash advance fee, there’s no grace period compared with making a regular purchase on your card, meaning you won’t have an interest-free buffer period to pay off the cash advance. The interest rate for a cash advance can often be higher than the interest rate for purchases, too.
- An advance could hurt your credit scores – Taking out a cash advance from your credit doesn’t affect your credit scores directly, but it could still influence them. For one, it’ll increase your outstanding balance, meaning it’ll raise your credit utilization ratio, which you can calculate by dividing your total credit card balances by your total credit card limits. For example, if your balance is $400 on a card that has a $1,000 limit, your credit utilization ratio is 40%. If you end up taking out a cash advance of $300 on top of that, then your credit utilization is 70%.
Most experts recommend keeping your overall credit card utilization below 30%. Lower credit utilization rates suggest to creditors that you can use credit responsibly without relying too heavily on it, so a low credit utilization rate may be correlated with higher credit scores. Secondly, cash advances tend to have a high interest rate, which could affect your ability to pay it back quickly. If you don’t pay the balance back in a timely matter, that could affect your credit scores. (Source: creditKarma.com)
There are alternatives to getting a credit card cash advance
If you need quick cash, consider these other options:
- Borrow money from friends or family. This option may be a bit awkward, but having people to turn to can help save some serious cash on high interest rates.
- Taking out a personal loan from a bank, credit union or online lender. If you have good credit, getting a personal loan may be cheaper than taking out a cash advance. It can take as little as a week to see money from these loans deposited in your account.
- Asking about a paycheck advance. If you have excellent rapport with your employer, you might be able to ask for an advance on your next paycheck. You can then arrange to pay it back when you get your next paycheck or spread repayments out over several paychecks.
How to Disable American Express Cash Advance Feature
American Express allows its cardholders to disable credit card cash advances completely. If a customer has a cash advance option on their card, they can opt out of cash advances. This policy gives cardholders complete control over their credit cards when it comes to withdrawing cash. Customizing the cash advance preferences for your card is as simple as making a quick phone call to your issuer. Just call the customer service number on the back of your card and set a cash withdrawl limit over the phone. You can also disable the feature and set the cash advance amount to ZERO. It’s entirely up to you to determine the limits.
Does American Express Cash Advance Work with a Stolen Card?
To take out cash advances at an ATM, you need a cardholder-designated PIN. So don’t worry about someone stealing your card and using it for a cash advance. The thief would also need to have access to your PIN. This is good to know if you ever lend your card to a relative or friend. They can’t make a cash withdrawl if they don’t also have the PIN. No PIN, no cash advance.
It may be possible, in some cases, to take out a cash advance with no PIN by showing ID with the same name as the credit card. This type of no-PIN cash advance typically occurs at casinos or banks. Because of security precautions, though, it is nearly impossible for a fraudster to take out a cash advance this way. Solurce: nerdwallet.com
American Express Cash Advance – Bottom Line
American Express makes it convenient to sign up for programs to access cash at participating ATMs. However, keep in mind that you’ll typically be charged a cash advance fee plus a high variable APR on your credit card account as soon as you withdraw money. A credit card cash advance could be a life-saver in an emergency. But, in essence, you’re taking on an expensive short-term loan. If you need a loan quickly, consider other options before going the cash advance route. In any case, make sure you understand the fees involved as well as payment terms to help you make an educated decision. If you DO take out a cash advance, you’ll want to repay it as soon as possible.