Payday Cash Advances versus Credit Card Cash Advances

Some people think that a credit card cash advance is helpful in emergency situations where cash is needed quickly. Much like charging something to your credit card, with credit card cash advancesyou can withdraw from cash machines at any time of day and repay over time. It’s just like charging something on your credit card. However, here are a few things you should consider before choosing this option:

• First of all, you must have a credit card and your account must be in good standing. If you just got a credit card, you may not be allowed to use the cash advance feature yet.
• If you need money to pay your credit card bill, then paying your credit card bill with a credit card cash advance is not the answer.
• Usually, your credit card issuer must approve you to be able to take credit card cash advances. They may do this after you have been a customer in good standing and send you a letter containing your credit card cash advance PIN. You can also request access to this feature. But if you haven’t been granted this privilege, you won’t be able to get the cash advance on your credit card.
• Since the maximum amount allowed for a credit card cash advance is typically a percentage of your total credit limit, you may not be able to borrow as much money as you need. For example, if your credit limit is £1,000 and you cash advance limit is 5%, you will only be able to borrow £50 in cash.
• Fees are also charged on credit card cash advances. Generally, the fee is 3% of the amount of the cash advance, but not less than £5 perhaps. That fee will also be added to your credit card balance and incur interest.
• Taking a cash advance on your credit card could cause you to go over your credit limit and incur over-the-limit fees and other penalties like an increased interest rate or frozen account.
• When you use a cash machine to obtain a credit card cash advance, the cash machone will probably charge you a fee as well. This amount varies from machine to machine.
• A greater APR is charged for credit card cash advances. Also, payments on your balance are applied to the lowest-interest rate transactions first. For example, if you have standard purchase transactions, cash advances and balance transfers on your account, your repayment will go towards the purchases first. So if you don’t repay the balance in full, a cash advance will continue to accumulate interest at the higher rate.
• Credit card cash advances can be costly over the long run and cause someone to stay in debt longer than is necessary.