Cash Advance Credit Cards and the Issues Involved
Cash advance credit cards can be a hassle-free way to fast cash for customers who are facing a financial emergency. However it is always better to keep cash advance as the last resort. As a rule, a cash advance arrives with higher interest rates than with other personal loans. You also have to pay various fees and there is no grace time. However, many go for cash advance credit cards, as it is much easier than having to wait long for other regular loans. Also there are no arduous formalities or paper work involved. All that is needed is a simple swipe of the credit card to take cash advance, and that’s why many fall for it.With a personal loan, you can compare different banks and negotiate for waivers on various fees. But with cash advance, it is obligatory that you pay a nonnegotiable finance charge every time you take cash. Moreover, this fee has a minimum rate irrespective of how less the amount you borrow is. The fee collected may either be a flat fee or may be based on a set percentage of the cash advance. Nowadays, many credit card companies combine the flat fee method and the percentage based technique and thus the fee gets even higher. So it is important that you clarify how the calculations are done before you go for the cash advance.
While taking cash advance credit cards, the most important aspect to be cautious about is the interest rates charged. Usually this is much higher than in a normal credit card purchase. Also the interest rate in cash advance fluctuates according to how you use the credit cards and how promptly you pay back the amount. If you are irregular in your payments, your interest rates will shoot up along with other penalty charges. And as there is no grace period with cash advance, the interest starts to soar right away. Even if you pay the credit card balance fully, you will still have to pay a finance fee for the cash advance. This is why it is prudent to go for personal loans where the various fees and charges are much lesser than with cash advance credit cards. Also the interest with a personal loan is typically a fixed rate right through the loan term and may vary slightly only if you go for a floating rate interest type.
Although cash advance can help you now and then in financially urgent situations, it is not recommended for regular use. Always use cash advance as the last option and try going for other loans that come with lesser interest rates. However, if there is no other option than taking cash advance; make sure you pay back the whole outstanding sum as soon as you receive the next bill.
