Understanding the Cash Advance
An advance is a specific type of lending that involves using a credit card to secure funds. The most common way to get an advance is to use a card at an ATM machine to withdraw money instead of getting help from a reputable lender such as PersonalCashAdvance. This is considered different than a regular purchase and will usually come with an interest rate that is up to 7% higher than for regular credit balances. Additionally, most charge card companies charge a $10 to $20 fee to administer an advance, running up the cost further. As if that is not enough, those who use an ATM outside of their banking network will most likely be charged fees on top of those previously mentioned. These ATM fees can be as high as $5 per transaction, depending on the institution. Those who belong to a network that offers online banking have the option of an online cash advance. This is similar to the aforementioned method, but can be completed entirely online by transferring credit from a card to a checking or savings account. With almost all short-term currency loans, there is no grace period which means interest accrues from the minute you withdraw or transfer the funds. Interest is compounded, making it a very expensive way to get money up front.
Be Aware of the Terms and Conditions
Customers who use advances on a regular basis should be aware of the terms and conditions associated with such loans. Card companies often limit the frequency of cash transactions allowed as well as the total amount available to borrow. Like other lending products, the Federal Government has started to regulate cash loans. The Credit CARD Act of 2009 limits the penalties card companies can impose if loans are not paid back completely. In order to make up for lost revenue by tighter regulation, it is inevitable that credit companies will look for different ways to bring in money. Usually this results in even higher interest rates and stricter terms. This is why it is crucial to closely examine the terms and conditions of a money loan, because they may have recently changed. Also, be sure to read the disclosures and any notices that contain changes to terms and services.
Recently, the banking and credit industry faced tighter regulations on fees and interest rates. As a result, most companies are forced to cap overdraft fees at a lower amount than in the past. Some consumers have picked up on this and intentionally spend more than their current bank account balance through checks or debit cards. This is method comes with certain potential repercussions as the bank or card company could close the account if it appears overdrafts are a regular occurrence.
When Should I Consider an Advance?
When you need funds in a hurry, it is important to objectively examine your options. While short-term lending might seem convenient, it is important to understand the true costs linked to this type of lending. Also, make sure you are not in jeopardy of maxing out the card limit which will force you to repay the balance before getting more credit or requesting a higher credit limit. Compare the convenience fees and interest rates associated with a cash advance to alternative short-term products to ensure you are getting the best value.