We all know that we could take out cash from credit card, and we know that this activity is in fact “borrowing” money from the bank. But there are lots of other methods about borrowing money by using a credit card. Typically, there are three types of methods:
This is the easiest way of borrowing money by using a credit card, because you can take your credit card to any ATM around you and directly take out cash in your credit card. The maximum amount of money that you could take out from your credit card is decided by your credit card terms. Some credit card allows you to take out around 2000 dollars at once, but some only allow you to take out 1000 dollars.
However, be careful about this method. When taking out cash from a credit card, the credit card company would charge you a higher APR that is called Cash Advance APR than usual.
Cash Instalment Plan
Some banks, such as HSBC, offers cash instalment plan, which allows customers to cash out the credit limit from credit card and allows them to return this amount of cash in instalment repayment. Just like cash advance, you could only take out the amount of cash that is equal or below your credit limits (for example, 1000 dollars). But cash instalment plan often offers a lower APR than cash advance. Take HSBC for an example, APR for monthly instalment is as low as 3.76%, but the cash advance will be around 5%.
Credit Card Loan
It is also possible for borrowing great amount of money by using a credit card. Different from personal loan which might require some collaterals, credit card loan is based on credit scoring. If your credit scoring is in good standing, you could request a credit card loan without any collaterals. By using this third method, you might borrow the amount of money that is above your credit limit.