Credit cards have come a long way since the days of old and what you can do with them is a lot wider-reaching now that it has ever been. A cash advance credit card is one where you can obtain cash that is loaned to you based on your existing line of credit with your credit card company. This means that, if you need quick cash, you can take your credit card to an ATM and receive a certain amount of cash based on the total line of credit you were given by the issuer, less the amount you have already used for other purchases. For some, this is an excellent, easy way to obtain cash, with fewer penalties than a payday or other alternative form of loan, but there are a lot of fees and other consequences associated with getting a cash advance on your credit card that you need to fully understand the terms for your particular card before making the decision to use it to get quick cash.
The ins and outs of a credit card cash advance
A cash advance from your credit card can be a very valuable feature, especially when you need quick cash in the event of an emergency or other unexpected cost. If you have fair to excellent credit, the terms and fees associated with using the cash advance feature are often a lot more fair and easier to manage. The problem with the credit card cash advance comes when you are unable to pay off the cash advance quickly.
Cash advances are not free of fees and other costs. You are generally charged a base fee – a percentage of the advance you are taking – and the interest rate on a cash advance line of credit is often much higher than that of traditional credit purchases. When you take out a cash advance on your credit card, you are not often given a grace period as with other purchases, which means that interest on the cash advance begins to accrue as soon as the cash is in your hands. If you are going to use this feature, it is vital that you take into account all the fees and costs that will be associated with using this feature.
If you have the ability to quickly repay the cash advance, this is a nice alternative when you need cash fast for emergencies. However, this is not a way to make ends meet, as this is a fast track to financial disaster if you cannot repay the advances in a quick manner.
A word of warning about cash advance credit cards is that there are often stipulations in the cardholder agreement that require you to first pay off your low interest, traditional credit purchases before you can pay off the higher interest cash advance. This means that until you can pay off your balance on basic credit purchases, the total cost of your cash advance will continue to rise. This is a stipulation that not all credit card companies have, but it is recommended that you check over the fine print before using this feature. If this stipulation is in the fine print, it is recommended that you really consider your other options before using this feature, as this can quickly saddle you with a large, unexpected debt.
While this is an excellent feature if you have the money to quickly repay the cash advance, and can be very helpful in emergency situations where you need cash quick, it is advised that you make sure you understand the full cost of using your cash advance credit card before using it, so you do not find yourself in an untenable financial situation. For those with fair to excellent credit, the terms of a cash advance are usually a lot more workable. Those with poor credit are likely to get hit with an inordinate amount of fees, making it difficult for them to repay the cash advance before the debt balloons out of control. This can be a great feature, so long as you understand the full cost of using it. As with all types of credit lines, it is recommended that you read the fine print and carefully consider your options before making a move.
