Why avoid a credit card cash advance when the offer can be very alluring? Because credit card cash advance is a loan and very expensive one. It can lead you to serious debt.
Why Avoid A Credit Card Cash Advance?
Moreover, you will also be charged an ATM fee. This varies from $2 to $5, based on the bank’s ATM you use.
Cash advances have a higher interest rate than the rate for purchases and balance transfers. The longer it takes you to pay, the more interest you accumulate. Cash advances are only good if you will pay right away.
What Is Involved?
A lot of financial institutions do not give a grace period on cash advances. Yes! Card holders do not have a complete billing cycle to pay off the full amount due. Interest starts accumulating from the date the transaction was made. Do not wait for your billing statement to be sent to you. Pay off your balance as soon as you can to avoid too much interest.
Even though the Federal law demands that financial institutions apply minimum payment to balances with the highest interest rate, they often apply whatever they want. On many occasions, payments above the minimum go to the lowest interest rate balance and prolongs payment period for cash advance balance. This also means paying more.
Why Avoid A Credit Card Cash Advance? More Debt
Have you been using cash advance to pay for your basic needs? It is a proven fact that cardholders taking out cash advance have a tendency not to pay back. Why? Taking a cash advance means you are having financial problems. If you cannot afford to take care of basic needs like food, shelter and clothing, you will surely have a hard time paying back. Whenever, you take a cash advance, you are simply increasing your debt.
What To Do
If you have been taking cash advance or you are currently in debt because of it, do the followings :
- Work harder to improve your income. You can take a second job or work overtime. Make your hobby a source of income.
- Make a budget and stick to it.
- Live within your means.
- Make arrangements to start paying your debts.
- Once you start the payments, continue until you completely pay all.
- Ensure you never ever take a cash advance again.