Cash Advance
Candlefocus EditorA cash advance is a short-term loan that can provide you with emergency funds when you need them most. Cash advance loans are offered by credit card companies, payday lenders and some merchants. Generally, a cash advance is based on the credit card limit you have available at the time, and is subject to interest and fees.
When you take out a cash advance loan, you should be prepared to pay more in interest and fees than you would with a traditional loan. Depending on the creditor, cash advance loans can have high interest rates, hidden fees and other charges that can raise the cost of borrowing money. Additionally, some creditors may limit the amount of cash that can be borrowed in a single advance and charge fees for each additional advance.
Although cash advances are convenient and can provide fast access to funds when an emergency arises, they may not always be the best option for consumers. The high cost of borrowing money and the potential to fall into a debt cycle should be taken into serious consideration before taking out a cash advance loan.
When considering a cash advance loan, consumers should investigate all of their options. Alternatives to cash advances, such as taking out a traditional loan or borrowing from family or friends, may be more cost effective and less risky in the long run. Consumers should also monitor their credit utilization ratio (the amount of their available credit they are using) as too much credit advanced can lead to a drop in their credit score.