Credit cards have become integral to most of our lives as it helps us manage our financial needs in a fast-paced digital world.
In this era of the digital revolution, where everyone shops for something or the other online, credit cards make payment a hassle-free and smooth experience with just a swipe or a tap.
However, we often face situations where the convenience of credit cards falls short as the requirement for hard liquid cash arises.
There are different situations where the need for cash may arise. For instance, you may be looking to invest in cash-only investment opportunities, or you may simply believe the saying that “Cash is King.”
The possibility is also that there is a financial crisis, and you need cash, but you don’t have access to traditional lines of credit or loan programs for not meeting the criteria.
However, if you are unaware, you would be shocked to know how valuable a credit card can be when you need cash.
So, this guide will help determine how to liquidate credit cards and fulfill your financial needs.
One should remember that they are unsuitable for withdrawing cash and more suited for offline and online purchases, although they can boost your credit utilization ratio.
One of the best ways to liquidate credit cards is cash advances. They are not so rare anymore, and people are taking advantage of this facility now and then. If others can use it successfully, why can’t you?
Let’s check in detail how we can do it.
When we think of how to liquidate credit cards, the first thing that comes to mind is cash advances. Let us check what they are, the drawbacks, and whether you should avoid them and adapt to another alternative method.
Cash advances are nothing but a loan that you can take against your credit line with the help of any credit card.
In this case, the lender is your credit card company, or sometimes it may be a lending partner such as a bank associated with your card provider.
You can easily access it with a pin from the ATM or withdraw it from the bank.
However, remember that you cannot withdraw any amount you wish. Many factors, such as income level, credit score, credit history, etc., come into play to limit the amount of cash that can be withdrawn.
This limit set by the card companies is known as the credit limit and is usually mentioned in the credit card statement.
If you have a credit card issuer that provides you with the facility of cash advances, then simply go to any ATM and follow the steps.
So, as we can see, it is difficult to withdraw cash against your credit card, but is it preferable? Should you run to the ATM whenever you need cash? I guess you already know the answer – No.
Cash Advances are significant for emergencies may be in a remote place where you need to pay cash as they don’t accept credit cards or any other situation that makes it the last resort.
Otherwise, it should be avoided at all costs. Let us now discuss the drawbacks and cons of cash advances.
You now know how to liquidate credit cards for cash advances and are happily running to the bank or the ATM to withdraw cash against it, wait! Don’t RUSH!
Cash advances don’t come without their cons. Let’s discuss.
People should avoid taking cash advances as the cash advance fees and interest rates are out of this world.
They are generally very high, much higher than the APR for purchases and other credit card usage.
Since taking out cash is a high-risk option for the lender, they charge a high-interest rate.
Since credit card cash advances are risky, most credit cards limit the amount of cash advance that can be taken.
Usually, it is only a tiny percentage of your credit limit. The limit is sometimes so restricted that even taking a cash advance may not resolve your issue.
Using them is risky as there is no grace period, and interest starts building up from the moment you take the cash loan.
Taking the maximum cash out can cause that interest to pile up quickly, and you will keep paying only the interest, not the principal.
Failing credit card payments with the high-interest rates may eventually ruin your credit score.
Remember not to dig the hole so deep that the shovel falls short when covering it.
Note: Another essential thing to note is that lenders or card issuers often consider wire transfers or money order purchases done through the credit card as cash advances. Hence, don’t think you can escape the high-interest rates by going through these routes.
Well! we can see that although cash advances are the most popular choice when cashing out a card is likely not the smartest one as it involves high rates of interest, significantly above 25 % or 30%.
This guide can help you become intelligent and innovative to beat the system to take a cash loan against your card and not be burdened with high-interest rates.
Let’s check how to liquidate credit cards with this trick:
Hurray!!! Now you have a cash loan and will only repay the principal at 0% interest rates.
For Example, you take a cash advance of $5000 from Card A, and then you get four cards, Card W, Card X, Card Y, and Card Z, which offer a balance transfer of $1250 each at 0% APR.
So, as soon as you receive the cash from Card A, transfer $1250 from Cards W, X, Y, and Z, cover the loan from Card A, and repay the loans to Cards W, X, Y, and Z at 0% interest.
Apart from the processing and cash advance fees, you will only pay back the loan amount without accruing any interest.
If you repay the loan on time by making regular monthly payments, it will boost your credit report, improve your credit history, and increase your credit limit for future loans.
Let us check some alternative methods of turning cards into cash.
Convenience checks are blank checks provided by some credit card issuers.
To encourage them to use the check service, the lenders often offer a no-interest-free period which means you can use the check to get a loan at 0% interest.
However, the critical thing to remember is that it only applies for a certain period of time called the “introductory period” and not beyond that. For example, most card issuers offer a six-month interest-free period for issuing convenience checks.
If you want quick access to a personal loan via this method, don’t forget to thoroughly comb through the terms and conditions and check the offer period before writing a check in your name.
Once you issue a check in your name, the lender will provide you with a cash loan at 0% interest.
This unsecured credit card debt must be repaid within that time, or else high interest will start accruing after the free period.
Many payment solutions in the market offer the service of turning payments from your end via a credit card into a check and mailing it to the beneficiary.
Additional charges, like a convenience or processing fee of up to 2.5%, are usually levied on these transactions.
The card companies consider these transactions as purchases, not cash advances.
This technique is handy when you need quick cash for paying rent to a tenant who mainly accepts cash or checks.
Companies such as Plastiq, Venmo, RadPad, RentMoola, etc., are some of the most popular payment solutions offering this service.
One also has the option to pay from multiple cards to build up the credit card balance for the final amount that is to be paid in checks.
Hence, you can again successfully implement the balance transfer strategy here and avoid paying high-interest rates or transaction fees.
If you can somehow manage to pay for services you use with credit cards, then it would be highly beneficial for you as it will lessen the pressure of getting cash or saving the cash that you have and also earn cashback and offers at the same time from the card issuing companies.
Services such as rent are primarily paid in cash, but some landlords may agree to payment with a credit card but with some convenience fee attached.
However, you should negotiate with the owner on the convenience fee and try to convince them of the amount you are willing to pay. If feasible and affordable, go for it, or leave this option.
Opening a merchant account is a popular option to turn credit into cash. These accounts target business owners needing regular cash to conduct their business.
A merchant account can easily turn your payments from a credit card into cash.
You just need a card reader and a processor to take payments via a physical credit card, or they can pay you online via payment apps.
As soon as the buyer pays you with a credit card, it is deposited as cash into your account.
Some payment solutions even offer this service without needing a business account.
They don’t even run a stringent background check or credit check as they are designed to deal with precarious businesses or may have bad credit.
Note: However, remember that you cannot process your credit card in your merchant account as that is strictly prohibited by card issuers and is considered fraud and money laundering.
If you urgently need cash, you can always seek help from your friends or family.
Everybody purchases something or the other almost every day; offer them to pay for their purchases with your credit card and ask them to pay you in cash instead.
For example, paying the rent of your roommate and collecting cash or paying for your cousin’s shoes online and collecting the cash.
This way, you don’t have to take cash advances and avoid paying for high-interest rates or risk ruining your credit score.
Another way to get hold of cash is to buy gift cards or prepaid cards and sell them for cash. The value you will fetch by selling the card depends on the type of gift card you have.
If the prepaid gift card is from a famous brand or store, you may fetch the total value, or you have to sell it at a discount, but it will satiate your need for quick cash.
As we have seen in this article, liquidating a credit card has its fair share of risks. So, if you are unaware of the risks and not sure how they may affect you, then it is best to avoid these methods.
Instead, pursue the following strategies to earn cash.
Build a financial plan, and don’t make unnecessary expenses you cannot afford.
Once you build your portfolio and have solid financial stability, you can buy the things you want, e.g., a luxury watch or a designer bag.
This way, you save cash, build your reserve, and use it when needed.
Use debit cards instead of credit cards to check your expenses and purchases.
It is human psychology to think of credit cards as free loans, but people often forget how risky it can become if they fail to make timely payments.
If possible, borrow money from friends and family members willing to help you.
It is the best way to take a cash loan as there are no checks and balances, and you just need to return it to your friends or family members on time to maintain their trust and your goodwill.
The best way to apply for a cash loan is through a bank as their interest rates are the lowest compared to others, but if you are not qualifying for a bank loan, approach financial institutions.
These money lending companies usually partner with different banks and offer small loans to customers from different bank branches or lending partners.
They don’t have strict background checks or qualifying criteria, but the only drawback is their high-interest rates.
However, it is a viable solution for the urgent need for cash, and the interest rates are comparatively lower than cash advance transactions from a credit card.
You can use the arbitrage technique to buy goods that are cheap and have the potential to fetch a higher price in the future.
If you can research and buy such things, it will successfully mitigate your need for cash, and you don’t need to know how to liquidate credit cards.
The most frequently asked questions are as follows:
You can liquidate money from credit using the cash advance method in the following way:
1. Get a card with the highest credit limit and apply for a cash advance.
2. Get four or five cards with a balance transfer option at 0% APR
3. Once the cash advance is approved, transfer the same balance from these cards with 0% APR and enjoy the cash loan at 0% APR.
The way to liquidate your credit card without cash advance is as follows:
You Can’t! Most peer-to-peer payment solution companies, including PayPal, prohibit using their platforms and services to liquidate credit cards.
Read More:
I hope you have understood how to liquidate credit cards through this article’s various techniques and strategies.
Although it may seem an easy method where you don’t have to visit banks and try to convince them to offer you a cash loan, there is a high price for this convenience.
So, be vigilant and think twice before taking a cash advance or liquidating a credit card, as it may significantly affect you and your credit report.
Take it ONLY if you need it and if there are no other alternatives, or follow the guide mentioned above and try to build a substantial cash reserve to aid your requirements when you need it.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial advice. The author’s opinions are their own and should not be taken as a recommendation to invest in any particular product or service. It is strongly advised that you consult a financial advisor before making investment decisions. Investing always carries risk, and it is up to each individual to consider their options and make informed choices carefully.
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