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Credit Card Cash Advances

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Every happy camper, of all people, should know the concept by heart. In out-of-the-way places, where most beautiful outings are bound to happen, the commercial establishments are as small as their needs. The people here need real currency, no mater how small?and no matter how big the emergency. Indeed, even the most awesome odyssey has its share of stealthy, unforeseen situations, e.g. lost money, wild animal attacks, insect bites, bouts of disease, food poisoning, lost first aid kits, thieves. And these scenarios are not even limited to vacations in remote places; a trip to Vienna may just be as pernicious.

Fortunately, most companies give their customers the alternative to take out cash from their credit cards as they would through ATM cards. This is the hallmark of a credit card cash advance, an option for card holders to borrow money?real, paper currency?against their credit limit.

Unlike ATM debit cards however, credit cards can dispense money for more than their current credit card balances. Plus, cash advances are not only obtained through ATM machines; one may obtain the cash advance over the counter as checks. They also have equivalents in certain gambling transactions.

Most banks give their credit card holders a fairly good idea of their cash advance limit vis-?-vis their credit limits. The bank statements, more often than not, indicate the limits, as two numbers. In any event, the threshold is smaller than the total credit limit and may waver over time, at moment's notice. Upon payment of the borrower, the bank would nonetheless replenish the cash advance limit. For payments made through check, the bank would replenish it after clearing the funds.

Granted, an ATM can dispense an amount bigger than the cash advance limit, but the machine would flag this transaction and pass corresponding penalties. Again, credit cards may provide paper money, so long as the account holder defers to the credit limit.

Still, cash advances can be expensive alternatives for many credit card holders. When one takes out a from a credit card, he or she has to cough up finance charges and interest fees on top of the obligation.

In fairness to credit card cash advances, their benefits far outweigh the costs. They are the best options available for credit card holders in light of an emergency, above all.

Cash advances ferret out money when all other means fail; loans and overdrafts require investments on time and energy. In fact, have lower APR than most other financial alternatives e.g. bank loans. In times of financial hardship, these options can help buy the grocery, pay the bills, extend the rent, and so on. With just a quick trip to the ATM machine, a cash advance can veritably save a life.

Such financial alternatives are also recommended for people with bad credit scores. Despite their morose credit scores, card holders can still partake of a cash advance.

Credit Card Cash Advances

The promise of cash advance, especially when this is tied to your credit card is totally tempting. The thought of instant money right in your metallic card is so convenient that you usually fall prey to this offer. The fact, however, is that using the cash advance option of your credit card is more impractical than practical.

Why is this so?

First, cash advance transactions do not have any grace period. Unlike card purchases that give you 30-45 days before you need to pay for those transactions, cash advance does not work this way. This means that even if a day after you've taken the money (from the ATM) you've made payment, you'll still be charged with the corresponding finance charges. In short, as soon as the money is released out of the ATM, then you're in for a relatively high interest rate.

Now, this piece of information may not be readily available because this is not really the primary purpose why people get a credit card. Those who apply for those metallic, magnetic and plastic cards want to make card purchases in their favorite stores or want to pay in establishments where Visa's and MasterCard's are very much welcome. The need to avail of this cash advance option gets emphasized when you need immediate cold cash -- for transactions that do not accept your prestigious cards.

Second, cash advances have different interest rates -- and always, these are slightly higher than those imposed on credit card purchases. And because cash advance transactions do not have a grace period, the overall finance charge imposed on you could skyrocket!

Wikipedia reports that in the US, interest rates for card purchases vary between 6% and 12%. The interest rate (remember, this is charged to you outright, no grace period given) for cash advance is between 20 and 25%!

Still, some card providers charge a flat rate for cash advance transactions. So whether you've borrowed $100 or $300 in cold cash, the finance charge will be the same.

And the list does not end. Other card providers charge a combination of percentage and flat rate as finance fee. Imagine the amount of money that you have to repay out of a simple and one-time withdrawal from your credit card!

Lastly, some credit organizations require you to pay your card purchases first. This means that unless you have lowered your credit card bill to a minimum or to zero, you would continue to accrue interest rates for your cash advance. They only deduct your payment from your cash advance balance once your payables from your purchases are cleaned.

Now imagine if you cannot fully pay your balance in a month's time, think about how much interest rate the bank can collect from you from your cash advance! Yes, you probably wouldn't want to calculate it unless you want to have a heart attack.

True, you may get instant cold cash through cash advance but the repercussions of this action may be far from favorable. You may not need to put up collateral or to wait in long lines because credit cards automatically provide you with a separate cash advance limit. All you have to do is line up in an ATM. But the finance charge for cash advance transactions could kill you.

Therefore, before you decide to use that plastic card to get instant cash, think again. Other methods have to be exhausted first. You may want to avail of personal loans, payday loans or you can even borrow money from a friend. Credit card cash advances should be the last resort because more often than not, this choice is highly impractical.

Money Loans Company - Payday Loans and Cash Advance

20 Eglinton Ave. East

Toronto, Ontario, Canada

M4P 1A9

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Both Johny Cash & Brendan Heins are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Johny Cash has sinced written about articles on various topics from Debts Loans, Credit Cards and Finances. Cash advances ferret out money when all other means fail; loans and overdrafts require investments on time and energy. In fact, have lower APR than mos. Johny Cash's top article generates over 9900 views. to your Favourites.

Brendan Heins has sinced written about articles on various topics from Finances, Debts Loans and Payday Loans. Need money? Try and other. Brendan Heins's top article generates over 18100 views. to your Favourites.

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