Have you ever tried to withdraw money from an ATM using your credit card, instead of your debit card? If yes, you must be knowing that this amount isn’t withdrawn from your savings account, but is a type of loan taken on your credit card. This type of loan is referred as ‘Cash Advance‘. It can be only a small amount, depending upon your credit card limit, and needs to be payed back, as soon as possible (preferably through upcoming paycheck).
When can a cash advance be used?
A cash advance can be used to support your critical financial requirement when nothing else can be of use. Well, flattering as it may sound, try to avoid using cash advance, mostly due to the huge interest that is charged upon this type of loan.
The pros of cash advance
Cash advances can be taken as easily as withdrawing money from an ATM, that’s the best thing about them. No paperwork (meagre, if there are any, for some banks/lending firms), and immediate cash in your pocket.
You don’t need to worry about the reserves, to get a cash advance from a lending firm, and hence cash advance emerges as a very lucrative loan lending option. This can easily be depicted as the most convenient form of loan, among all the other options available, from any and every source.
Every coin has two sides
The most important con of taking a cash advance is the interest that is charged upon it, which starts from day one. You do not get any grace period for this type of loan, unlike another form of loans.
The cash advance surfaces as the most expensive form of loan due to the double interest charged. First one, on the borrowed money and second the regular credit card interest. So, if you decide to take cash advance on credit card, pay it back as soon as you can.
Do not forget!!
Opt for cash advance only if you are in dire need of cash immediately and you do not have any other option to go to, and yet if you decide to take it, remember following:
Have a look at the rate of interest that you’ll be paying.
Do not get confused between credit card expense and cash advance.
Try making purchases on your credit card, so that you are left with money, even at the end of the month (for unexpected financial emergencies).
Always oversee your balance and spend accordingly.
Cash advances are a very tempting means of having cash with you, at times when you’re running low on cash and need it terribly. But, unless, you have looked at every other means, try not to get opt for this option.
Remember, credit card usage is very different from cash advances, and you must not be baffled before using them.
‘Gaming floors have become the major platform where people use cash advances’, according to a recent survey. Do not let yourself go in debt, that can cost you mental peace.