A cash advance is a great way to get some cash when you are low on money, but you take out the cash, you need to learn and get yourself familiarized with their terms and conditions. There are different types of cash advance and they include, a credit card cash advance and a short-term cash loan. And yes, there are many reasons why people choose to get cash advance, mainly because they are easy to obtain, but you need to be careful as they can get expensive, especially if you are using a credit card. So, if you are planning to get a Cash Advance, you need to understand how they work, so that you do not have to end up paying for more:
How Do Cash Advances Work?
A cash advance can be defined as a short-term loan usually offered by your credit card issuer. It is a way to get your cash using your credit card. In this scenario, instead of making purchases with your credit card, you are purchasing cash. There are different ways how you can get a cash advance; through the ATM, in person or a convenience check. With your PIN you can go to an ATM and get the cash advance. You can also visit your bank and ask for a cash advance in person. Credit cards usually come with a convenience check, so you can write a check to yourself.
The Terms and Fees of Cash Advance:
Cash advances do come with terms and conditions and fees. And although they are an easy way to get cash, there are times when the fees outweigh their benefits. So, make sure that you go through the terms and conditions before you decide to take out a cash advance. The cash advance usually carries a higher and a separate interest rate, and your card issues could also charge an amount for the cash advance fee. Even if you take it out from the ATM, there will be a fee and the same goes for when you visit a bank. Another major disadvantage of a cash advance is that there is no grace period, which means that you will be charged an interest rate starting from the first day. And cash advances usually come with a separate credit limit, so you might only be able to take out a few times.
Disadvantages Of Taking A Cash Advance:
When you are in dire need of money, a cash advance could save you, but if you are not careful, it could end up leaving you with debts. You can easily go to an ATM or a bank to get the cash advance and spend it however you want, but there are some disadvantages, and let’s look at them. It comes with a high-interest rate, so you could end up paying more in interest as compared to the amount you collected. And as soon as you take out the cash, you will be charged with interest. Another disadvantage is that there could also be additional charges depending on the issuer. These cash advances are easy to get, but they do come with many disadvantages so you should be careful.
Can It Affect Your Credit Score?
If you are wondering whether the cash advance will affect your credit score or not, it does not affect your credit score directly, but it can indirectly. Meaning if you are not able to pay back the loan and the huge amount of interest, it will certainly leave a mark on your credit score. If you are unable to manage your debts, you could end up falling behind, and as a result, you will see a negative impact on your credit score. If you are planning to take a cash advance, make sure that you can pay back the loan and the interest rate on time.
Getting a Cash Advance will give you money in hand when you need it, but it can be risky so make sure that you are aware of the disadvantages.
