GM Creditz Pte Ltd is a licensed moneylender (License No. 102/2020) listed in the Registry of Moneylenders, under the Ministry of Law in Singapore.

What Is a Cash Advance and Should You Get One?

Although Singapore is one of the most expensive and busiest countries in the world, it doesn’t have limited access to supplementary cash services for those in need.

This proves how cash advances are existent for local Singaporeans and tourists from available banks and financial institutions.

It is also worth noting that this option in Singapore is a service that goes beyond banks and established financial institutions. And you’re in Singapore or virtually in any region, you can find these cash advance services and use them to your advantage.

What Are Cash Advances, Anyway?

From the word it suggests, advance tells a lot about moving forward or speeding towards an objective. Thus, performing a cash advance is to request an amount of money ahead of time. This generally features steep interest rates and fees, but they are attractive to borrowers because they also feature fast approval and quick funding.

Banks and other financial institutions offer cash advance services through a line of credit or credit card. These allow borrowers to get the cash equivalent to 30-50% of their total salary as a first-time cardholder. Meanwhile, licensed moneylenders can provide payday loans.

Types of Cash Advances Available in Singapore

  1. Credit Card Cash Advances
    This is the most popular type of cash advance- borrowing on a line of credit through a credit card. The money can be withdrawn at an ATM or, depending on the credit card company, from a check that is deposited or cashed at a bank. Credit card cash advances typically carry a high-interest rate, even higher than the rate on regular purchases.
  2. Merchant Cash Advances
    On the business side, merchant cash advances allow owners to borrow money from banks. In return, the business will cooperate with banks regarding credit card promotions and bonuses. Additionally, they’ll pay a percentage of credit card sales to the bank.This is an easy cash advance process allowing borrowing businesses to tide over specific fiscal difficulties immediately. The credit card promotions and bonuses have low effects on their everyday sales and profits, allowing them to pay on banks on time and completely.
  3. Payday Loans
    Merchant cash advances and payday loans are virtually similar. However, payday loans focus on individual Singaporeans and foreigners. Time-bound payments will not permit delays, and borrowers can use payday loans to address these immediate billing and debt concerns to avoid ballooning debt and disconnections.In Singapore, most freelance workers have great use for payday loans because of their salary’s nature. If they submit proof of employment and invoice receivables, licensed moneylenders can provide them a month’s worth of salary to address their billing concerns.

Pros and Cons of Cash Advances

PROs

  1. Quick access to an unsecured loan. This is because cash advances are one of the fastest forms of small business financing available. Usually, you just need to submit a few months’ worth of credit card and bank statements. Should you apply online and are approved, money can be immediately in your bank account in as fast as 24 to 48 hours.
  2. No good credit score required. Unlike actual loans, cash advances do not require you to undergo a lengthy process. Moreover, you won’t even need good credit to acquire one. Securing a traditional small business loan from a bank usually requires having a near-perfect credit score. Cash advances offer no such stipulations.

CONs

  1. Steep fees and higher interest fees. It is deemed the cash advances typically carry a high-interest rate, even over the rate on regular purchases: People will likely pay an average of 24% – about 9% higher than the average APR for purchases. What’s more, the interest begins to accrue immediately.
  2. Torn between availing a personal loan or a cash advance? Check this guide to know which option best suits your needs! Unlike most deals such as loans, when one avails a cash advance, there will be no rewards and cashback.
  3. No grace period. While a card cash advance could be a reasonable option for someone who has an emergency need for money and limited resources for getting it, its interest begins to accrue immediately.

Are Cash Advances Affecting Your Credit Score?

It can be noted that taking out a cash advance will most likely have no direct impact on your credit or credit score, however, it can hurt it indirectly in various ways.

Should you take the advance using a credit card, it will immediately raise your outstanding balance. This will then raise your credit utilization ratio, a measure that credit scoring models use to calculate your score.

Assuming that you owe $500 on a $1,500 limit card, for example, your credit utilization ratio is 30%. However, if you take out a $300 cash advance on that card, the balance will jump to $800, resulting in a credit utilization of more than 53%. High utilization rates are a big indicator of credit risk; when your ratio exceeds 40%, it can adversely impact your credit score.

Always remember that a cash advance usually has a high-interest rate. If this affects your capability and ability to pay the monthly charges on time, that also could hurt your credit score. And should the cash advance put you over the card’s credit limit, your credit score can be dented.

Understand that even after your balance is repaid, your credit report will reveal the highest balance reported, and other potential lenders will also see that you were over the limit at some point, which could hurt your ability to get another credit.

Cost of Cash Advances

Despite cash advances being one of the easiest ways of borrowing, it is however also the most costly. This is because it comes with its own unique set of fees and interest rates that do not normally exist in other channels such as personal loans.

Bank Cash Advance Fee Interest Rate
 

American Express

American Express

5% 24% APR, charged daily
 

ANZ

ANZ

5% or S$15 (whichever is higher) 28% APR, charged daily
 

CIMB

CIMB

6% or S$15 (whichever is higher) 28% APR, charged daily
 

Citibank

Citibank

6% or S$15 (whichever is higher) 29.9% APR, charged daily
 

DBS

DBS

6% or S$15 (whichever is higher) 28% APR, charged daily
 

HSBC

HSBC

5% or S$15 (whichever is higher) 24% APR, charged daily
 

Maybank

Maybank

5% or S$15 (whichever is higher) 24% APR, charged daily
 

OCBC

OCBC

6% or S$15 (whichever is higher) 28.92% APR, charged daily
 

Standard Chartered

Standard Chartered

6% or S$15 (whichever is higher) 24% APR, charged daily
 

UOB

UOB

6% or S$15 (whichever is higher) 28% APR, charged daily

It is worth noting that there is an upfront cash advance fee that ranges from 5%-6% of the amount you will borrow. Thus, even a S$300 cash advance will cost you nearly up to S$18 immediately, on top of the ATM fees.

What Are Other Options You Can Consider?

If you think cash advance isn’t for you, you can always try applying for a:

  1. Payday loan – Cash advance and payday loan share some similarities. Both promise quick funds. This is an easy fix for short-term cash flow dilemmas, such as monthly rent, utilities, among others.
  2. Personal loan – This is usually best for when you have large, one-off expenses like car repairs or home improvement projects or if you’re consolidating high-interest debt into a single loan with a lower interest rate.
  3. Credit card – This option, meanwhile, is meant for smaller, more frequent expenses that you can pay off relatively quickly. We even recommend paying off your entire bill before it’s due. Credit card companies only charge you interest if you carry a balance from month to month, so by paying it off entirely, you’re essentially getting a free short-term loan.

For a simpler and clearer view of how these two differ, understand that

Payday loans:

  • Can provide 1 month worth of salary
  • Must be paid within a month or on your next payday
  • Can be secured or unsecured
  • Can charge lower interest rates

Personal loans:

  • Are installment loans
  • Can be secured or unsecured
  • Has a known end date for when you’ll pay off the debt
  • Can charge lower interest rates

Credit Cards:

  • Are revolving credit
  • Can be secured or unsecured
  • Can offer rewards
  • Can come with a 0% introductory offer on purchases and/or balance transfers
  • Is possible to stay in debt forever if you continue to use the card faster than you pay it off
  • Won’t owe any interest if you pay the balance in full each month
  • Typically charges higher interest rates

For other alternatives, you may also consider:

  • Borrowing money from friends or family. This might be a little uncomfortable to some, but the savings will be worth it nonetheless.
  • Overdrawing your checking account. Instead of taking a cash advance at an ATM, consider overdrawing your checking account with your debit card. You will face a fee, but you won’t have to worry about paying interest.

The Bottom line

Cash advances aren’t that really alarming when used infrequently, but they are indeed the best short-term solutions when meeting emergencies. Thus, for urgent needs, a cash advance is an easy, but expensive, way to access funds.

If you’re looking for a licensed money lender for your payday loan or personal loan, you would only take three easy steps with GM Creditz! You can easily call 6588 4866 or apply online then attend an in-person consultation to get your money afterward!

Banks may usually reject applications due to low or bad credit history, the good thing about GM Creditz, it responsibly assesses your monetary situation and takes into consideration the improvement of your current financial condition.

 

About GM Creditz

GM Creditz is a low-cost and flexible loan provider.

Our aim is to give you the money you want, when it’s needed, whether you have a sudden emergency that has set you back financially or if you want a boost to help kick start your future plans. Put simply, we cater for individuals with different financial situations, whether you have a good credit report or one where other lenders are unwilling to offer you a loan, we want to help.

We have built our business on solid principles by offering a fair and transparent service, and, as a reputable lender, we make sure you can afford your repayments. Depending on the amount, we offer unsecured loans so you don’t need to secure an asset like your house or car against the loan. You don’t need a guarantor either as we work hard to provide you with the money you need at a rate you can afford.

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