The cash advance is an easy and accessible way to get your hands on some cold hard cash when credit or debit just isn’t an option. These short-term loans are borrowed against your credit line, and will thus need to be paid back – like any other expense you make with your credit card.
Convenient and hassle-free, cash advances can seem like an attractive source of fast cash. But before you stick your credit card into that ATM machine, it pays to know the 5 most common mistakes people make when using cash advances.
Borrowing Before You Think
So there you find yourself, in a sticky cash-only situation, and the only solution you can think of is to take out a cash advance and get your money fast. While it might seem like a convenient, immediate source of cash, it still pays to think before you go through with the process. Think about how much you need, when you might be able to pay it off, your incoming sources of cash that you can use to pay, and any existing debt you might already have.
Paying Just the Minimum
So you’ve used up your cash advance, and now your bill is here. Although it might seem easier to pay just the minimum indicated by your bank, you might want to consider adding in a little more. Paying as much as you can afford to pay during every due date helps reduce the amount of time your debt sits. In doing this, you reduce the amount of interest in incurs, and you’ll end up paying less all together.
Overlooking the APR
Credit cards will impose interest on any expense that you pay for using it. But the APR for their cash advance might be different all together. In some cases, the APR for a cash advance could reach up to 20% or more, depending on the institution behind the card. If you feel that you might spend too much on interest, consider other sources of quick funds instead, like a cash loan.
Forgetting Other Options
On the topic of cash loans, it’s important to remember that the cash advance isn’t the only source of quick cash available at your disposal. The equally convenient cash loan can be another great source of fast cash, offering just about the same amount with slightly different terms and interest rates. Before you go running to the nearest ATM, check out lenders that offer cash loans first – you might find something to better suit your needs.
Taking More Than You Need
It’s a common impulse for most of us to take a little extra ‘just in case.’ Unfortunately, that mentality might cost you more instead of giving you a little extra cushion to fall back on. Taking more than you need shapes your state of mind to think that you have extra to spare. And with that, you’ll end up finding something to spend that extra amount on.
Unless you really need it, don’t take out more than you actually need for your purpose. This helps you stay within your budget and paves the way for more affordable repayments down the line.
Cash advances can be tricky, but as long as you play your cards right, they can be a great source of hassle-free funding. Make sure you keep these common mistakes in mind to help yourself become a smarter borrower and navigate the intricacies of cash advances with the utmost ease.