Why You Should Stay Away From Cash Advances | Refresh Financial
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Why You Should Stay Away From Cash Advances

 Why You Should Stay Away From Cash Advances

When used carefully, credit cards can be a fantastic tool for boosting your credit and managing your money. These little pieces of plastic have lots of beneficial features when used responsibly. It's important, however, to use them carefully and avoid one of their features altogether. Here's why you should stay away from cash advances.

What is a cash advance?

A cash advance is when you make a cash withdrawal from the remaining credit on your card. You would use your credit card like a debit card at an ATM and withdraw cash. It might sound tempting, but it's not as great as it seems. Here are four reasons why:

1. Fees

- Cash advances often have fees that are charged to your credit card account at the time of the withdrawal.

2. Interest

- Cash advances have different interest rates than regular credit card purchases. It's much, much higher.

3. No grace period

- Interest on cash advances begins accumulating as soon as you withdraw the money. This means that even if you pay off your withdrawal within the same week you took it out, you'll still be charged interest.

As you can see, a cash advance from your credit card is similar to a payday loan. You're borrowing cash at an incredibly high price and it can be the initial steps of spiraling into deeper and deeper debt. They are one of the easiest ways to get in over your head in debt.

Instead of a cash advance, consider some of these alternatives if you really need the cash. If you're traveling, make sure you're prepared with some traveler's checks and an internationally functioning debit card. If you just need a few bucks, ask a family member or a friend instead. You might even consider a secured savings loan – there are no upfront fees, and it’s the most effective way to rebuild a damaged credit score. Click here for more information on secured savings loans from Refresh Financial.

In short, try to stay away from cash advances like you would a payday loan. They’re simply not worth it.

Have you ever made use of a cash advance on your credit card? How did that turn out? Let us know in the comments!

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