What Is a Cash Advance
14 Mar What Is a Cash Advance
Should You Take Out a Cash Advance?
A cash advance can be an effective way to get money fast in an emergency situation. But it’s important to consider the potential downsides before you take out a cash advance, like high interest rates and steep fees. This guide will help you weigh the pros and cons of taking out a cash advance so you can decide if it’s right for your unique situation.
Firstly, let’s define what we mean by ‘what is a cash advance’ in our situation. It can mean 2 different things depending on which country in the world you’re reading this. As Badger Loans is a UK site catering to UK customers we are using UK definitions or at least what we customarily consider to be UK definitions.
Let’s narrow this down by deciding where you can get a cash advance from. Your employer by way of a ‘sub’, a bank or other lender by way of a loan (but this isn’t usually referred to here as a cash advance), or your credit card, which is exactly what we mean.
Cash Advances: What They Are and When to Use Them
Cash advances are designed to give you quick access to money when you need it. The main advantage is that you get your cash upfront, meaning you’re not required to pay back part of your loan or credit card before receiving some of it. However, cash advances often carry high interest rates and high fees. Before using one, compare them with other types of loans. It’s usually better to get a personal loan than take out a cash advance because they have much lower fees. But there are some situations where taking out a cash advance makes sense; here’s how to decide if it’s right for you.
Pros of Taking Out a Cash Advance
Cash Advances offer convenient, fast cash. If you need cash right away, a cash advance could be your best option. Plus, they often come with shorter repayment terms than other loan types. If you know how long it will take you to repay that cash advance, then it could be an attractive choice. You should also consider whether or not having a short-term loan will increase your overall financial health in the long run.
Cons of Taking Out a Cash Advance
The biggest downside to taking out a cash advance is that you’ll pay for it upfront. This will hit your wallet hard if you don’t have enough cash on hand. Before you know it, you’ll owe hefty fees and interest. Especially if financing your cash advance from your credit card. Typically credit cards charge interest rates between 20-30% just for purchases and a lot more for cash advances.
It’s worth bearing in mind here that credit card cash advances come with 2 fees. There’s the ‘cash advance fee’ which is usually a % of the amount borrowed. Hence borrow £1,000 on your card with a 3% cash advance fee and that’s £30 straight off the bat. Borrow 3 times that amount in a month and your fees for the month are £90.
Next there’s the ‘daily interest charge’ and this will be more than their usual interest charges for purchases. The interest will also be charged from the day you borrowed it rather than the date on your bill as for purchases.
Check the rates for cash advances before you borrow money against your card because almost all credit card providers will charge you substantially more in interest to borrow money from your card. Charges vary from around 25% all the way up to 50% and that puts them firmly in payday loan territory!
It’s Not Just Cash!
It’s not just hard, folding cash that counts as a cash advance either. Buy lottery tickets on your credit card and you’ve just taken out a cash advance! It’s the same for gambling or shopping vouchers – they count as cash too. Always be extra careful when putting anything on your credit card which may be deemed to be cash or its equivalent by your card provider.
If you’re not careful, you might never be able to recover from these costs. That’s why cash advances are only appropriate in certain circumstances. For example, when an emergency crops up and you need money quickly.
If you want more advice and guidance on cash advances have a read of the Citizen’s Advice page on credit cards and charges.
We hope this helps.
Published at Mon, 14 Mar 2022 07:57:43 -0500
31/03/2022 Reunião do Comitê de Governança Estratégica – CGE
31/03/2022 Reunião do Comitê de Governança Estratégica – CGE
Foto: Tom Costa / MJSP
By JusticaGovBr on 2022-03-31 10:51:28