If you’re a credit card holder in Singapore, you may be wondering if cash advances are part of your credit limit. The short answer is yes, but there are some important things to understand about how cash advances work and how they can impact your credit.
When you take out a cash advance, you’re essentially borrowing money against your credit limit. The amount you can borrow will depend on your credit limit and other factors, such as your income and credit history. However, it’s important to note that cash advances usually come with higher fees and interest rates than regular credit card purchases.
Before you decide to take out a cash advance, it’s important to understand the fees and interest rates involved. You should also consider how a cash advance will impact your credit and your ability to repay the debt. With that in mind, let’s take a closer look at cash advances in Singapore and what you need to know before you borrow.
Key Takeaways
- Cash advances are part of your credit limit in Singapore, but they come with higher fees and interest rates than regular credit card purchases.
- Before taking out a cash advance, it’s important to understand the fees and interest rates involved and how it will impact your credit and ability to repay the debt.
- There are alternatives to cash advances, such as personal loans or borrowing from friends and family, that may be a better option for your financial situation.
Understanding Cash Advances in Singapore
If you’re in need of quick cash, a cash advance may be a viable option. However, it’s important to understand the basics of cash advances in Singapore before you decide whether or not to use this service.
The Basics of Cash Advance
A cash advance is essentially a short-term loan that you can take out against your credit card. This means that you’re borrowing money from your credit card company, and you’ll need to pay it back with interest. Cash advances are typically used in emergency situations when you need cash quickly, but they come with high fees and interest rates.
When you take out a cash advance, you’ll typically be charged a fee of around $15 or 6% of the amount you withdraw, whichever is greater. In addition to this fee, you’ll also be charged interest on the amount you borrow. This interest rate is typically higher than the interest rate you would pay on a regular credit card purchase.
Credit Limit and Cash Advance Limit
It’s important to note that your credit card has both a credit limit and a cash advance limit. Your credit limit is the maximum amount you can spend on your credit card, while your cash advance limit is the maximum amount you can withdraw as a cash advance.
In Singapore, the cash advance limit on your credit card is typically capped at $5,000. This means that you can’t withdraw more than $5,000 as a cash advance, even if your credit limit is higher than that.
It’s also worth noting that the amount you can withdraw as a cash advance is typically lower than your credit limit. For example, UOB pegs cash advance amount to 75% of your credit limit or available credit limit, whichever is lower. This means that if your credit limit is $10,000, your cash advance limit may only be $7,500.
When you withdraw cash from an ATM using your credit card, you’ll typically be subject to a daily withdrawal limit. For example, UOB allows a maximum cash withdrawal amount of $3,000 per day from a UOB ATM.
In conclusion, cash advances can be a useful way to get quick cash in an emergency, but they come with high fees and interest rates. It’s important to understand your credit limit and cash advance limit, as well as the fees and interest rates associated with cash advances, before you decide to use this service.
Fees and Interest Rates
When it comes to cash advances, it’s important to be aware of the fees and interest rates associated with this service. In Singapore, cash advance fees are typically a percentage of the amount withdrawn, with a minimum fee charged. Banks also charge interest on cash advances, which can be significantly higher than the interest rates on regular credit card purchases.
Cash Advance Fee Structure
If you’re considering a cash advance, it’s important to check the fee structure of your credit card provider. For example, DBS and POSB charge a transaction fee of 8% or S$15 (whichever is greater) for each cash advance transaction. UOB, on the other hand, charges a cash advance fee of 6% or S$15 (whichever is greater).
Interest Charges on Cash Advances
Interest charges on cash advances can be much higher than the interest rates on regular credit card purchases. For example, DBS and UOB charge an annual interest rate of 28% for cash advances, while OCBC charges 28.92% per year. It’s important to note that interest on cash advances is usually charged from the date of the transaction until the amount is paid in full.
When withdrawing cash from an ATM, it’s also important to check the maximum withdrawal limit. For example, the maximum withdrawal amount from a DBS/POSB ATM is S$3,000 per day, while the maximum withdrawal amount from a UOB ATM is also S$3,000 per day.
In summary, cash advances can be a convenient way to access cash when you need it, but it’s important to be aware of the fees and interest rates associated with this service. Always check the fee structure and interest rates of your credit card provider before taking out a cash advance, and make sure you understand the terms and conditions of the service.