Why You Should Avoid Credit Card Cash Advances
Personal Bankruptcy Trustee in New Westminster, BC
If you’ve ever been desperate for cash, a credit card cash advance may have sounded like a good idea, but you likely ended up paying way too much in fees and interest in the long run. Cash advances are tempting at times, but the trustees at J. Bottom & Associates Ltd. are here to provide all the information you need about credit card cash advances and why you should avoid them in New Westminster, BC. Cash advance fees can be outrageous, and you’ll want to know everything about cash advance rates before you make your decision. We offer personal bankruptcy services in Port Coquitlam and North Vancouver, BC, and are here to help you learn why to avoid cash advances and explore some more positive alternatives. Get in touch with us today for a free consultation.
What Is a Credit Card Cash Advance?
Emergency situations come up from time to time, and credit card cash advances can be tempting. Cash advances are loans from your credit card issuers. You get cash as a withdrawal from your credit card account. Some ways to do this include getting cash from an ATM or using convenience cheques. There is usually a limit on the amount of money you can get in an advance, and there are always fees associated with the transaction. Credit card cash advances come with a transaction fee which is added to the amount of cash you receive and charged to your credit card account. Be sure to understand that the APR for cash advances is almost always higher than it is for credit card purchases. Unlike some credit card purchases, there is generally no interest-free period with cash advances and they begin accruing interest immediately.
Why to Avoid Cash Advances
Credit card companies often make it easy and convenient to get cash, but there are many reasons to avoid these cash advances. Check out the following reasons why a credit card cash advance is usually a bad idea:
- High Interest Rates – Taking a cash advance results in paying higher interest rates than making regular purchases with your credit cash.
- Expensive Fees – The expensive fees resulting from your cash advance are typically based on how much you are withdrawing. Fees can be a percentage of the amount, which can be up to 8%, and you may be charged a flat fee instead. A cash advance from an ATM will likely come with an ATM fee as well.
- No Grace Period – While using credit cards at all is generally not a sound financial decision, some purchases have a grace period and allow you to earn rewards. This perk does not exist with a credit card cash advance, as interest rates begin immediately. You also won’t earn perks such as points, cashback, etc., with a cash advance.
Alternatives to Cash Advances
Now that you know why you should avoid a credit card cash advance, you need a solid plan in the event of an emergency. The following are some alternatives to obtaining a cash advance:
- Have an Emergency Fund – It may seem difficult right now, but the best way to avoid getting into trouble financially is to build up an emergency savings fund. The fund can be used for car repairs, medical bills, and more.
- Avoid Unnecessary Purchases – Sometimes, people want cash because they want to make a purchase, not because they need it. Ask yourself if the purchase is really worth the extra fees. You may be able to do without or get the money you need without the fees and interest from a credit card company.
- Get a Private Loan – Consider getting a private loan from a friend or family member, although doing so can sometimes put a strain on your relationship. You may be able to get a loan from a bank or credit union or request a line of credit or a credit card limit increase.
Helping You Get Out of Debt
The legal team at J. Bottom & Associates Ltd. is here to help you break the debt cycle. Not being in debt and having an emergency fund makes you far less likely to need a credit card cash advance and avoid the fees and interest involved with such a transaction. We offer free consultations for those in New Westminster, North Vancouver, and Port Coquitlam, BC. There’s no such thing as a silly question, so contact us today.