This is a basic little description and definition of what a cash advance is, and why you would get one, or need one. Credit cards are everywhere and they can definitely be a source of quick cash in the form of a cash advance. Cash advances can be obtained at ATMs or by using checks supplied by the credit card companies and banks. Also, the credit card companies have provisions for obtaining emergency cash advance services if you’re traveling and have all your valuables disappear.
Credit cards differ in that they go by credit or credit cards. Charge cards are supposed to be paid off at the end of the month. Credit cards on the other hand, allow balances to accumulate and be charged interest. While standard credit card rates are about 15% and up, cash advance loans can go from 20% and up.
The main advantage of this strategy is that it’s so easy and fast. Go to an ATM, insert the card, enter your pin, out comes the cash. Many small business owners who know they will never get financing any other way, get 10 credit cards and get $1000 cash advances to come up with the $10,000 they think they need to get going. It’s not cheap money and you have to have credit that is good enough to qualify, but it’s definitely one way to raise cash.
Once you are done adding up the fees to get the cash advance, the high credit card interest rates, and the possible ATM fees, you’ve got one very high priced source of quick cash. Pay careful attention to exactly what fees the credit card company charges are. For instance, some charge a percentage of the transaction, others charge a flat fee. Many charge both for a combined fee.
The other thing to remember is that some credit card transactions have a grace period in which you can pay them off without interest or penalties. There is generally no such period for the cash advance.
Also credit card companies apply your payment and order they prescribe. They may apply your payments to the other debt you have on the car before they pay off any of the cash advance. So if you can’t pay off the whole balance, you may wind up paying the higher interest rate on the whole balance you’re carrying. Only if you don’t have any other debt on the card, and you’re sure you can pay off the whole balance within the month, are these good sources of quick cash.
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A LOAN CALCULATOR FOR CRUNCHING YOUR NUMBERS IS BELOW; Enter your loan amount, how many years, the interest rate, and payment frequency (14 for biweekly, 30 for monthly, 7 for weekly. Very helpful so you know exactly what the loan will cost you in interest payments and you will know the total COB (cost of borrowing).
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