Credit Card Advances Defined
Credit card advances are offered by most credit card companies and allow users to withdraw a certain amount of cash either through the ATM or at the bank. This amount is typically a percentage of the card’s credit limit. Cash advances are basically short-term loans that you must pay back as soon as possible. Generally, most credit cards include a separate cash advance calculation. This limit, along with any interest added to it, cannot exceed your total overall credit limit. While cash advances seem tempting, you should heavily consider the costs involved before choosing this route as a short-term solution.
The Hidden Costs
Most cash advances come with a one-time transaction fee. This can be up to five percent of the total advance given. In addition, interest fees begin to accrue immediately and you are not given the normal grace period traditional credit card lending offers. The APR for cash advances is also typically higher and can range from one to seven percentage points higher than a card’s normal purchasing interest rate. Essentially, cash advances are high risk money, and should only be considered for emergency situations. Before considering a cash advance, you should ask yourself if you will be able to pay back the money in a month and if it is for an item you really need. If the answer is no, then you should not consider a cash advance as a viable option.
There are other lower risk options you should consider first, such as a credit union loan. Credit unions offer small, short-term emergency loans with low interest rates; and these types of loans usually offer a flexible approval process. In addition, if you are having problems meeting short-term expenses such as bills, consider calling your creditor to ask if they can work with you and give you more time to make your payments. You would be surprised by how many are willing to do this.
Often times, those considering cash advances are facing several financial problems that affect their credit. If you are currently dealing with credit issues, let Ovation help you. We offer a wide range of credit repair solutions that are customized to meet your unique needs.
Contact us today to see how we can help.