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How Does a Cash Advance Work?

Even in today’s almost-cashless economy, there are still situations where you might find you need “real” money. From strolling through market stalls to picking up some furniture from a local on Gumtree, there are times when physical cash creeps its way back into circulation.

But what can you do when you typically tap or click “BUY NOW” for every purchase?

Well, taking out a cash advance with your credit card might seem like the obvious answer. Join us as we explain how to get a cash advance and explore whether it’s a viable solution for getting quick cash.

How does a cash advance work with a credit card?

You can think of a cash advance as using your credit card to buy cash instead of items. Just like any product you purchase on your credit card, the cash you withdraw will be placed onto your credit line to be repaid – and it’ll continuously accrue interest until you pay it all back.

How to Get a Cash Advance

Getting a Cash Advance at ATM

Does your credit card have a PIN? If so, you can likely get a cash advance from an ATM.

If not, head to a bank that accepts your type of credit card. Make sure to bring photo ID.

The Downsides of Cash Advances

A credit card cash advance is certainly an easy way to get money quickly, but it comes at a price.

To begin with, the ATM or bank you use to get your cash advance will likely charge you a transaction fee. Then you have the cash advance fee charged by the credit card company itself (either a flat fee or a percentage of the cash amount).

It’s also worth noting that the interest on cash advances is often significantly higher than the interest charged on actual purchases. Plus, you’ll likely begin accruing interest on your cash advance immediately (no grace period).

Alternatives to Cash Advances

Breaking Piggy Bank

As you may have guessed already, a cash advance is rarely the ideal path to getting money.

Instead, you might want to consider:

  • Overdrawing on your savings. Sure, you’ll cop a fee, but at least you won’t get slammed by interest.
  • Borrowing from a family member or friend. While not always possible and potentially a little embarrassing, this option is worth taking if it’s available to you.
  • Breaking open the piggy bank. If it’s literally a “need cash but only got plastic” situation, it might be best to dip into that piggy bank that’s been collecting dust on your kitchen counter.
  • Asking for an advance at work. If you can stomach the awkward conversation with your boss, you could potentially save hundreds in fees and interest.
  • Taking out a personal loan. A short-term cash loan may work out better than a cash advance. And whereas most credit cards will cut you off at a couple of hundred dollars, Cigno can help you borrow up to $1,000. You can also apply online from the comfort of your home or while out and about – no need to trek down to the bank or search for your nearest ATM.

For more information about how a small cash loan compares to a credit card cash advance, contact our team of short-term financial specialists.

Disclaimer: Please be aware that Cigno Loans’ articles do not replace advice from an accountant or financial advisor. All information provided is intended to be used as a guide only, as it does not take into account your personal financial situation or needs. If you require assistance, it is recommended that you consult a licensed financial or tax advisor.

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Financial Risk Disclaimer

Please consider your own circumstances before you use Cigno. Please make sure you read our Privacy Policy, Terms and Conditions and this Financial Risk Disclaimer.

Cigno is a business name of FTA Data Solutions Pty Ltd ABN 95 670 814 221.

FTA Data Solutions Pty Ltd is an Authorised Credit Representative (Credit Representative No. 552387) of Finance & Loans Direct Pty Ltd Australian Credit Licence No. 390166.

Cigno is not a credit provider or a credit assistance provider. When you complete the Information Form, you are not applying for credit or any other particular goods and services. The completion of our Information Form also does not guarantee that you will be provided with credit or any other goods and services through our network.

Depending on the information you provide to us in the Information Form, we endeavour to assist you by providing your information to our intermediary partners. Where we provide your information to our intermediary partners, we may receive a fee.

If the information you provided to our intermediary partners meets their requirements, they may connect you with a credit provider, goods and/or services provider and/or specific products to meet your their needs (depending on the information your input into the Information Form).

Any application you ultimately make through a particular credit provider or goods and/or services provider is subject to that provider’s eligibility criteria and terms and conditions. The loan, credit, product or service may not be available to every person. We do not endorse or recommend any particular provider, product or service that you be connected with or offered. All statement on this website are general in nature and do not constitute financial, credit or legal advice (or any other advice).

Contact

SMS: 0429 213 774
Email: [email protected]
Post: PO Box 1810, Southport BC, QLD 4215
ABN: 95 670 814 221

FTA Data Solutions Pty Ltd.

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NOTIFICATION OF MISCONDUCT BY CIGNO AUSTRALIA

Ordered by the Federal Court of Australia

The Federal Court of Australia has found that Cigno Australia Pty Ltd (Cigno Australia) and BSF Solutions Pty Ltd (BSF Solutions) have breached the law by engaging in unlicensed credit activity and charging prohibited fees.

In the period from July 2022 to 3 October 2023, over 100,000 consumers have been lent a total of $34 million, and charged fees of over $70 million, under the ‘No Upfront Charge Loan Model’ operated by BSF Solutions and Cigno Australia. At no time has either BSF Solutions or Cigno Australia held an Australian Credit Licence.

The Court also found that Mark Swanepoel (director of Cigno Australia) and Brenton James Harrison (director of BSF Solutions) were involved in these breaches of the law.

With effect from 24 May 2024, the Court has granted permanent injunctions preventing Cigno Australia and BSF Solutions from:

  • demanding, receiving or accepting fees or charges, including amounts of loan principal, from consumers in relation to credit provided under the ‘No Upfront Charge Model’; and
  • engaging in further credit activity pursuant to the ‘No Upfront Charge Loan Model’, including by entering into new agreements with consumers, for so long as they do not hold an Australian Credit Licence.

Cigno Australia was ordered by the Court to, by 5th July 2024, send written communications to consumers who between July 2022 and December 2022 entered into agreements with Cigno Australia and BSF Solutions under the ‘No Upfront Charge Loan Model’.

The Court will later determine whether (among other things) Cigno Australia and Mark Swanepoel ought to pay a pecuniary penalty in respect of this conduct, and whether Mark Swanepoel should be restrained from carrying on a business engaging in credit activity.

Cigno Australia, BSF Solutions, Mr Swanepoel and Mr Harrison intend to appeal the decision of the Court and have filed an application for leave to appeal. If the appeal is successful, some or all of the orders of the Federal Court of Australia may be set aside.

Where can you get more information?

Where to go for further support

You can access legal advice in your state at: Free legal advice – Moneysmart.gov.au.

If you are experiencing trouble with debt, or money worries in general, contact:

  • the National Debt Helpline on 1800 007 007 or online chat (9:30am to 4.30pm, Monday to Friday).

If you need someone to talk to, contact:

  • Lifeline on 13 11 14 (24 hours) or their crisis support online chat or
  • Beyond Blue on 1300 22 46 36 (24 hours) or their webchat