When you hear cash advances it isn’t just making a withdrawal using your debit card it also implies the acquisition of loans. It can be very expensive and as a result, leads to credit card debt. Make sure you can repay very fast before using your credit card for a cash advance.
The reason Credit Card Cash Advance is Expensive
The reasons why credit card cash advances are expensive are outlined below. Check out the list and make good decisions on your credit.
Cash Advance Fees:
Usually, Cash advance fees range from 2 percent to 5% of the cash advance amount. Most credit cards are known for high charges.
An ATM fee of $2 and $5 would be charged depending on which bank’s ATM that is being used.
Most times the interest rates charged on cash advances is very high. It is even higher than the rate for purchases and balance transfers. If you fall behind on payment in cash advance cases, then the interest you’re to pay will pile up.
Credit Card Cash Advance Companies doesn’t have mercy time:
When we talk about Credit Card Cash Advance, Majority of Credit Cards Company does not allocate or have grace periods in Cash Advances. That is Periods in which customers will not be penalized on failure to pay or meet up on any payment. It is the customers not obtaining the full billing cycle to pay off the full amount due. A very good way you can reduce the amount of interest you pay is making quick payments, not waiting until you’re notified by mail or inbox.
Rules on how to make Payments:
There is a mandatory rule enforced by the Federal law that mandates credit card companies to allocate the minimum payment to balances with the highest interest rate. Above the minimum, then Credit Card companies can apply their choice of interest.
Most times any payments that are beyond the minimum are usually linked to the lowest interest rate balance meaning before a cash advance balance is paid off it takes a very long while which subsequently will result in you making more payments as a result of the long while it takes to pay the cash advance balance.
It might have cash flow issues or difficulties
The moment you resolve to obtain a cash advance, it implies you’re having financial issues and difficulties. Normally it is expected that you have a strong stable income to meet your financial responsibilities.
It is very likely that people who are involved in cash advances are prone to default on their credit card debt than people who do not. Among the numerous reasons mentioned, this is also a reason why interest rates on cash advances are higher
You need to adjust your budget and spending plan If you’re always resolving to use your cash advances to pay for groceries.