There are days when you need cash on the double and most (if not all) credit cards have this option. But before you run to your ATM; here are some things to think about.
Do You Really, Really Need it?
First up on the checklist is the need factor. Cash advances have notoriously high fees and interest charges so before you even think of taking out cash from your credit card, consider if you’ve tried every other avenue. Personal loans are an option, and some can be cheaper than taking a credit card cash advance, but processing time can take from 3-14 days so if you really need to pay for something quickly with cash (although this situation is usually unlikely as most hospitals, etc accept credit cards) you may have to consider a cash advance.
Credit Card Cash Advance vs Cash Instalment Plan
A credit card cash advance is available readily with use of your credit card through an ATM. However, a cash advance from an ATM will usually carry a fee of 5% per transaction or a minimum of RM15-25. On top of this fee, you will be charged the highest annual interest rate in the range the bank offers (usually 17-18%) (usually 17-18%). If you are withdrawing a large amount, the initial 5% will be a hefty amount already and that is even prior to charging full interest.
If you really need cash from your credit card, a new way of lending has been devised: enter the cash instalment plan (CIP) against the credit balance/limit of your credit card, charged to you at a fixed instalment payment amount. Most banks who offer this type of loan product remove the 5% fee but you don’t get the convenience of using your credit card at an ATM.
Depending on your situation and amount required, you’ll be able to make the decision on which to pick. A smaller amount required uber urgently at an instant will justify a cash advance withdrawal but if you want a large amount and have a few moments to spare, better to choose the cash instalment plan.
How to Apply for a Credit Card Cash Instalment Plan
For a CIP, you would usually have to either call a CIP designated phone line or fax a form in. Some banks occasionally accept forms via email or you can just apply at a bank branch. Once approved, funds will be transferred to your elected savings or current account and depending on your bank funds can be in your account as quick as the next working day or as long as 2 weeks (which in turn actually diminishes the truth in it being termed ‘quick’). Do check with your chosen bank before proceeding.
You would also have to be mindful to ask the bank officer if you first need to have a savings or current account with the bank. Whilst most banks offer Interbank Giro bank-ins (with a slight delay of 1-2 days and/or a nominal transfer fee of RM2) or will send you a cheque; some will require you to first open a savings or current account with them.
There are banks which offer attractive interest rates but some just match your standard credit card rates. Nonetheless, the savings on the initial cash advance fee, if your amount is large enough, makes the call or fax to the bank worth it.
Use an Empty Credit Card
It is always best to use an empty credit card with no outstanding balance no matter which cash withdrawal product you choose. This will ensure you pay off your borrowed cash amount within the tenure stipulated and you avoid paying exorbitant amounts of interest should your bank settle your outstanding amounts based on date charged rather than highest interest first.
Battle of the Cash Instalment Plans
A cash advance is relatively simpler than a cash instalment plan. At withdrawal from the ATM you are charged a fee of 5% or a minimum of RM15-25 depending on your bank. After which a 17-18% interest is charged on a daily rest basis until you pay off the full amount.
But cash instalment plans are not so straightforward. Below are some of the lowest cash instalment plans offered by different banks:
|Bank/Product||One time fixed interest rate (p.a.)||Tenures||Transaction Fee/Processing Fee||Minimum amount (if any)|
|RHB CashXcess||8-10%||12-36 months||No||No|
|HSBC Cash Instalment Plan||8.88%||12-36 months||2% cash advance fee if less than RM5000 borrowed. 0% if RM5000 and above||RM1000 for generic CIP Offer (with 2% cash advance fee) and RM5000 to be eligible for the 0% cash advance fee.|
|OCBC Call for Cash||5.99%||12-36 months||1% cash advance fee||RM1000|
|Alliance Bank Fast Cash Plan||5.99%||12-36 months||No||RM1000|
|Hong Leong Bank Call-for-Cash (Only For Ex EON Bank Cardholders)||2.99% - 10.99%||6-36 months||RM2 for Interbank Giro transactions up to RM100,000||RM500-RM1000|
|Hong Leong Bank Cash on Call (For original HLB customers)||9.88%||12-36 months||RM12 handling fee, RM2 interbank Giro fee and RM25 early settlement penalty||RM1500|
|Maybank Ezy Cash||0%||6 months||3.88% cash advance fee||RM2000|
|AmBank QuickCash||8.99%||36 months||RM100 early settlement fee||RM1000 For approved amounts of RM20,000 and RM12,000 a free gift of an Iphone 5 or Ipad Mini is given respectively.|
If you don’t have a credit card from the cash issuer of your choice, apply online at RinggitPlus. You can also check with your current bank if they have any cash instalment plans available as the list above isn’t exhaustive.
Ready, Set, Cash In
Whichever method you choose, always make sure you read the terms and conditions and if in any doubt, be sure to hound you bank officer for the info! The product is there for your convenience and to help you in times of trouble so ensure it does just that – not get you into more trouble!