Cash advances can be a quick and convenient way to get access to cash when you need it, but it's important to understand how they work before you take one out. Here are 5 things to consider before taking out a cash advance:
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Interest rates are usually higher for cash advances. Because cash advances are a type of short-term loan, they usually come with higher interest rates than other types of credit. Make sure to compare the annual percentage rate (APR) of different cash advance options before you decide on one.
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Fees can add up quickly. In addition to higher interest rates, cash advances often come with fees for things like processing, application, and account maintenance. These fees can add up quickly, so make sure to read the fine print and understand all the costs associated with the cash advance.
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They should only be used as a last resort. Because of the high costs associated with cash advances, they should only be used as a last resort when you have no other options. Consider other options like borrowing from a friend or family member, or using a credit card with a lower interest rate before taking out a cash advance.
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You'll need to pay back the cash advance quickly. Cash advances are usually due back in full, including interest and fees, within a few weeks or months. Make sure you have a plan in place to pay back the cash advance on time to avoid additional fees and interest charges.
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They can impact your credit score. Taking out a cash advance can impact your credit score, especially if you don't pay it back on time. Make sure to carefully consider the impact on your credit score before taking out a cash advance.
In conclusion, cash advances can be a useful option in a pinch, but it's important to understand the costs and risks involved before you take one out. Make sure to carefully consider all your options and only use a cash advance as a last resort.