Getting a cash advance is as easy as going to a bank or ATM, presenting your card and taking cash. But there is a price to pay for quick access to cash, and sometimes it's much more important than you expect. Credit card cash advances can be a reasonable option for someone who has an urgent need of money and limited resources to get it, but they can also be expensive and generate credit card debt. Here are the pros and cons of using a credit card cash advance.
Pros:
A cash advance is relatively easy to obtain and does not require any money available in any account.It could also put you at greater risk of falling behind on credit card payments. The balance could tilt in favor of a cash advance if you use a card with no cash advance fee. In that case, you just have to worry about interest payments.
Cons:
Fees generally fall between 2 and 5 percent of the total cash advance amount, and there are very few cards that don't charge this type of fee. In addition to this high commission, there will also be a high interest rate associated with your cash advance.Applying for a cash advance may also increase your credit utilization rate, which may adversely affect your credit rating. There is no grace period and interest starts to accrue as soon as you receive the cash. Cash advances are not alarming when used infrequently, but at best they are short-term solutions to deal with. If you find that you frequently use cash advances to pay for especially essential things, such as food, it's time to take a closer look at your budget and spending and make efforts to align the two. If they are becoming a habit, or if you find that you regularly need a cash advance to make ends meet, then you need to make drastic changes to the budget and expenses.
Leave Reply