There are benefits and drawbacks of a credit card cash advance. One of the more common disadvantages of a credit card cash advance is the possible damage it can do to your credit rating, especially if you take a long time to pay off the balance. It’s commonly known that you should never max out the limit on your credit card, as such details go on your credit report and can harm (however slight) your credit rating.
However, it is a lesser known aspect of credit that the more cash advances you take out on your credit card, the more it will harm your credit rating even if you pay off the balance in a timely manner. The logic behind this is that taking out a cash advance represents a risk to the credit company, and the more cash advances are taken out, the higher the risk.
If you can utilize the services of a cash advance loans lender you can take advantage of the need for cash without the potential harm to your credit provided you pay off the loan amount. And in many cases, it’s possible the fee associated with a loan could add up to less than the finance charges incurred by taking a cash advance from your credit card.
In fact, most cash advance lenders do not require credit checks. Short term installment loans and title loans are based on your income, or equity you have in your vehicle. When you repay the loan on time, there is no negative report to the credit bureaus, so utilizing a small loan won’t affect your credit rating.
There are several other reasons why it is better to avoid taking out a cash advance from a credit card apart from the higher interest rate and automatic fee. Depending on where you get your cash advance, the bank that actually handles the transaction (whether over the counter or through an ATM) will likely charge you for the service. And there are no grace periods for cash advances. Generally, if you use a credit card for purchases and pay off the balance the following month, there are no interest charges added to your balance. But with a cash advance, interest begins to accrue immediately. In addition, if you have a balance that contains purchases as well as a cash advance, and you only send in the minimum payment on the credit card at the end of the month, that payment gets applied to the lower interest balances first, like the purchased items, and the higher interest cash advance can potentially stay on your credit card balance for a long time, causing you to have to pay out more in the long run.
Cash advances from a credit card are a bad idea, and should be avoided whenever possible. Consider cash advance installment loans if you need cash quickly.