A credit card cash advance is a very convenient way to borrow money safely as long as you have yet to exceed your borrowing limit. You can get the money through any ATM and instantly pay for any urgent household bills, or mortgage payments etc. It may be surprising, but many people are actually using their credit lines for daily expenses and even the minimum monthly payments on other credit cards. This is cause by the persistent problems of unemployment and pay cuts that affected the livelihoods of many people.
A credit card cash advance allows you to borrow money up to your designated credit limit. Besides the usual APR rate on such loans, there may also be various withdrawal fees for using your credit line. The advantage is that they are a very convenient way to borrow money regardless of your current credit score.
Costs of Credit Card Cash Advance
A credit card cash advance actually cost cheaper than most unsecured signature loans you can find online, however you can only get a high limit credit card account while you still have good credit. That means you should sign up for credit cards when you are doing good. Once your credit history is damaged, you may not even be approved for unsecured credit cards so you are only left with high risk signature loans in those situations. To compare, the average APR on credit card loans is 25% and there is no interest free grace period unlike purchasing on credit. In short, the loan rates are lower but not that low anyway.
If you need a loan but is already struggling with bad credit, borrowing money on a credit card cash advance is still cheaper than you expected. The typical interest payable on a credit card cash advance is 25%, while the APR on $1000 poor personal credit loans can be as high as 300% APR. Most borrowers do not realize the difference, because they tend to pay back the loan on time within 30 days, which is about $20 for a $100 loan.
Dangers of Credit Card Cash Advance
You have to avoid constantly relying on credit card cash advances to pay for expenses every month. It will cost you a lot of money when used as a source of long term borrowing. For example, a $10,000 credit card balance can cost you an additional $3,000 of interest fees per year. That is money that would have gone into your pocket if you do not owe the banks so much money in the first place. Unless your income increases tremendously, most people end up with financial difficulties and heavy debts eventually even though they started with just a $1000 credit card cash advance.
Your credit card cash advance may be equivalent to a $1500 dollar loan, but you may not be able to get a new account if your credit is already damaged. Furthermore, you need to take note of your available credit limit and not exceed it with your borrowings. Use it sparingly and only for emergencies, otherwise you may not have any credit left when you really need some money to pay the mortgage before the bank forecloses it.
If you are struggling with financial difficulties, get help for your personal debts as soon as possible. You need to cut down on expenses and increase your earnings in order to become debt free, and many people will be able to benefit from better money management methods. Otherwise, it is too easy to think that a credit card cash advance can save you whenever you need some cash fast.