The promise of cash advance, specially when that is linked with your charge card is totally tempting. The idea of instant money right in your metallic card is really convenient that you always fall prey to the offer. The very fact, however, is that utilising the cash advance option of your charge card is more impractical than practical.
Why is this so?
First, cash advance transactions do not have any grace period. Unlike card purchases giving you 30-45 days before you need to cover those transactions, cash advance does not work this way. Which means even if a day after you’ve taken the cash (from the ATM) you’ve made payment, you’ll still be charged with the corresponding finance charges. Simply speaking, as soon as the cash is released out of the ATM, then you’re in for a comparatively high interest rate.
Now, this piece of information might not be readily available because this is not really the primary purpose why people obtain a credit card. Those that apply for anyone metallic, magnetic and plastic cards want to produce card purchases in their favorite stores or want to pay in establishments where Visa’s and MasterCard’s are quite definitely welcome 정보이용료 현금화. The necessity to avail of this cash advance option gets emphasized when you really need immediate cold cash — for transactions that do not accept your prestigious cards.
Second, cash advances have different interest rates — and always, they’re slightly more than those imposed on charge card purchases. And because cash advance transactions do not have a grace period, the general finance charge imposed on you may skyrocket!
Wikipedia reports that in the US, interest rates for card purchases vary between 6% and 12%. The interest rate (remember, that is charged to you outright, no grace period given) for money advance is between 20 and 25%!
Still, some card providers charge a set rate for money advance transactions. So whether you’ve borrowed $100 or $300 in cold cash, the finance charge could be the same.
And the list does not end. Other card providers charge a mix of percentage and flat rate as finance fee. Imagine the amount of money that you’ve to repay out of an easy and one-time withdrawal from your charge card!
Lastly, some credit organizations need you to pay your card purchases first. Which means until you have lowered your charge card bill to the very least or to zero, you’d continue steadily to accrue interest rates for the cash advance. They simply deduct your payment from your cash advance balance once your payables from your purchases are cleaned.
Now imagine if you cannot fully pay your balance in a month’s time, consider simply how much interest rate the financial institution can collect from you from your cash advance! Yes, you most likely wouldn’t wish to calculate it unless you wish to have a heart attack.
True, you can find instant cold cash through cash advance however the repercussions of this action may be definately not favorable. You might not need to put on collateral or to wait in long lines because bank cards automatically offer you a different cash advance limit. All you need to do is line up within an ATM. But the finance charge for money advance transactions could kill you.
Therefore, before you decide to use that plastic card to obtain instant cash, think again. Other methods need to be exhausted first. You may want to avail of personal loans, payday loans or you may even borrow money from a friend. Bank card cash advances should be the final resort because more regularly than not, this choice is highly impractical.