Is A Credit Card Cash Advance A Good Idea?
A credit card cash advance, also known as a cash advance loan, is basically a withdrawal of funds from your credit card's account. Basically, you're borrowing against your credit card against the cash you've put into your account to put money in your pocket. But there are fees and limits on how much you can take out, and in some instances, interest rates on these loans. If you don't keep up with the payments, you could find yourself paying back much more than you initially took out in a cash advance.
You should think carefully about getting a credit card cash advance before you get one. Because the fees associated with this type of loan are high and sometimes have to be paid in order to get the loan, this isn't an option for many people. If you do decide to take one out, you should always shop around to find the best rates and terms. This means you need to check with other banks to see if you can apply and get a better rate or credit limit on another bank's credit line. The better a deal looks, the more likely it is that you'll actually get it.
Most credit card cash advances are short-term loans that don't have any sort of grace period. You pay them off when you get your next paycheck. They can go anywhere from a few days to a couple of weeks, but they usually carry a very high-interest rate. In fact, the interest rate can be so high that many lenders consider these types of advances to be a second mortgage. The reason is that you're essentially paying back twice the value of what you took out – which means over the course of two or more years, you could be paying back almost twice the original amount.
Many people, however, use credit card cash advances for emergencies only. These are usually short-term loans and are designed specifically for financial emergencies. They can be used to help cover the cost of utilities and car repairs, for instance. They can also be used in emergencies to help tide over a cash shortage between paydays. For this reason, most credit card providers offer some sort of emergency loan feature – whether it's a grace period, repayment plans, or the ability to extend the term of the cash advances.
Even if you're not planning on using your credit card cash advance for emergencies, it's important to remember that they exist. It might seem unlikely that you'd ever need cash advances, but sometimes emergencies pop up that leave you short of the cash you need. As long as you carefully read the terms and conditions of the credit card cash advance you get, you should always be able to repay it when you need cash. Just make sure that you budget the repayment plan accordingly.
One of the best ways to budget the repayment of a credit card cash advance is to work out how much you'll need each month. If you don't have any spare cash, then you should probably shorten the repayment period. Otherwise, make sure you can afford to make the full monthly repayment. It's important to remember, though, that any amount of extra debt may increase your interest rate. So, if you can repay your cash advances within the specified time period, then a credit card cash advance isn't such a bad idea after all.
