All credit cards allow you to obtain cash advances. On the other hand, even though the existence of cash advances seems convenient to you, that does not mean that you should benefit from it. Withdrawing money from your credit card is the first step towards a precarious financial situation. In fact, cash advances are a great source of income for credit card companies that take advantage of people’s difficult financial situations. Money advances are one of the worst financial transactions you could ever make. In addition, this can affect your credit history and lead to high debt. These are some facts you should know before deciding to apply for a cash advance on your credit card.
Using your credit card in an ATM does not equate to using your debit card at this counter. By using the credit card, the credit company will charge you extra fees to borrow money. There is also the usual cost of an ATM. Money advance fees range from $ 10 to $ 20, which means a $ 20 withdrawal could cost you $ 30 to $ 40 at the end.
If the imposition of additional fees is not enough to discourage you from using cash advances, interest rates should probably succeed. Similar to any normal transaction made from a credit card, cash advances are subject to interest rates. But, unlike traditional transactions, when you advance money, you lose the grace period. What does that mean ? In short, you will pay the interest on the cash advance immediately after the withdrawal. In addition, interest on cash advances is usually higher than the interest rates associated with simple purchases. Interest can vary between 1 and 7% depending on your credit card company.
Each of your financial decisions influences your credit rating. The credit score represents the soul of your financial life. Taking large cash advances on your credit card or even taking small amounts makes the full refund much more difficult. Having a large debt on your credit card for a long time will definitely affect your credit rating in a negative way. As a result, it will be more difficult to obtain a loan in the future or to be approved for a mortgage.
Too much debt on your credit card makes you a worrying and risky customer in the eyes of banks, who will be less inclined to do business with you. In addition, if ever the bank grants you a loan, the interest rate that will be offered to you will be significantly higher than the normal rate.
There are other alternatives
Other alternatives are available to you in financially difficult situations. There are other borrowing opportunities that will allow you to address your financial difficulties quickly and be more beneficial over the long term.
- Personal credit
- Credit on your automobile title
- Mortgage line of credit
Before you insert your credit card into an ATM, find out about these three alternatives. You will be surprised to see how fast and useful they are compared to cash advances. In the long run, one of the alternatives will save you a lot of money, given the fact that interest rates are lower than cash advances.
With a personalized / private loan, you will be able to repay the costs of cash advances, in addition to paying most of your credit card debt. The personalized loan allows you to start from scratch. In addition, the use is easy and fast: a single payment with respect to your private lender.
Credit cards are useful. On the other hand, do not let the immediate benefits of cash advances destroy your long-term credit history. Financial problems are a heavy burden on your shoulders. But the sooner you start looking for alternatives, the sooner you will reach your financial freedom.