Emergency Cash: 3 Alternatives to Personal Loans

shutterstock_110142032When we need emergency cash, a personal loan from a bank is usually the first thing that comes to mind. But due to the somewhat lengthy application and approval process, a personal loan may not be a viable option especially when money is needed on extreme short notice.

In this article, we’ll show you some alternatives to securing quick cash from the banks, for times when you really need that cash in hand in a hurry.

1) Cash Advance on a Credit Card

A good number of credit card users do not know about this; but most credit cards in the market actually come with cash advance facility that allows you to withdraw cash on credit through an Automated Teller Machine (“ATM”), using the Personal Identification Number (“PIN”) that is issued along with the credit card.

With cash advance, there is no application or approval as long as your credit card supports this feature. The downside to this is that cash advance usually comes with hefty interest rate (i.e. it could be your credit card’s maximum-tier interest rate, or sometimes even higher) as well as once-off charges. Strictly speaking, you’d be better off swiping your credit card to make the payment from a financial standpoint!

2) Overdraft on a Debit Card

Some debit cards come with an overdraft (“OD”) facility – which basically means you’re able to utilize the card to make payment or withdrawal up to a certain limit even though the balance of your bank account has reached zero or below. If you own such a debit card, you can easily make use of the OD facility to obtain some cash in a hurry.

But like cash advance, OD does come with once-off charges and high interest rate. In fact, a quick survey on the Internet showed that a debit card with OD facility, as issued by RHB Bank, is currently charging a minimum interest of 15% p.a. on utilized OD amount as well as a whooping 24% p.a. on amount beyond the predetermined OD limit!  The latter is a massive figure… even by credit cards’ normal standard.

3) Overdraft on a Bank Account

OD does not necessarily need to come in a debit card. In fact, many bank accounts in Malaysia, such as Hong Leong Personal Loan One Account, do come with an OD facility.

However, because OD on bank account usually needs to be applied for and could potentially take up just as much as time as applying for a personal loan; it may not be an ideal option for those looking to get access to money in a hurry.


A Reminder to iMoney Readers

Just as cash advance and OD could get you out of a temporary financial situation really quickly; they could also cause you to rack up a debt problem in a hurry due to exceptionally high interests. Commonly, such options are recommended only in the most extreme of emergencies.  When it comes to using money that isn’t yours, the less you do it, the better!

Love this article? You might be interested to read about the best way to find a personal loan with the lowest interest rate.

Need to secure a personal loan? Find out which bank is giving the best deal by comparing personal loans.

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