To Cash Advance or Not to Cash Advance

by MarketProSecure

The average consumer may have days when he or she needs extra cash—now. A car might break down, you may have medical or dental bills that must be paid—now—or what happens if one must make an emergency flight. The essential question becomes, from what source should one look for this direly needed extra cash. Parents are always good, they don't charge interest. However, if parents are out of the question, then you may consider the relative advantages and disadvantages of cash advance from a credit card or a pay day loan.

Cash Advance on Credit Card

Let's discuss fees and interest rates you may incur if you get a cash advance from your credit card. First, the bank may charge you an advance fee from the moment you receive your cash. In addition, some banks subtract the fee from your cash advance, so you pay it before you even get your hands on the money. Banks often charge a fee of from 2 percent to 4 percent on cash advances as well as higher interest than you would pay on regular credit card purchases. The last issue to consider is, often the payments you make will be allocated to the lower interest purchases first, allowing the higher interest cash advance charges to accumulate.

Cash advance interest rates vary from lender to lender. When you choose a credit card it is a good idea to review all of their charges and fees. If your cash is tight you may also decide it is advisable to transfer all of your balances to a card with low interest rates. In that case, you should be aware of balance transfer fees. The chart below compares current cash advance interest rates and balance transfers for several popular cards. It is to your advantage to be familiar with these charges when signing up for a new card or deciding which cards to keep. Cash Advance interest rates and fees (if applicable) and balance transfer charges can add up in a hurry. Interest rates change frequently, read your statements to determine if the fees and interest rates change.

Comparing Cash Advance Interest Rates

(Always read the full terms and fees disclosure provided by the credit card issuer before you apply. Terms and fees can and do change.)

Payday Loans

Perhaps, it would be better to get a payday loan? We shall see. First let's consider convenience, payday loans do not require a credit check. Even clients who are considered bad credit risks can be accommodated. Therefore, you cannot be turned down because of previous financial reverses. This could be extremely important to individuals who genuinely need cash right away and have no other resources. The only information that may be required of you would be your name, address, employment and banking information.

It may be a little difficult to understand your interest rate with a payday loan. Most loans average around $300 on a two-week term. Interest rates normally range from 390 percent to 780 percent. The interest rates are for a year, whereas the loan period is a matter of days. A payday loan requires you to repay your loan by your next pay day…thus the name—pay day loan. If you do not pay by the due date, lenders impose significant penalty charges and higher interest rates. Remember, payday loans are considered secured loans. Therefore the interest that you pay may be less than on a cash advance from your credit card.

National Fast PayDay Loan states that you have money in your account by the next day. You can apply on line, just as you do for credit cards. Their criteria are relatively painless. There are age and salary requirements and you must have a checking account. Learn more about payday loans and the various requirements and decide if they are right for your emergency financial needs.

Things Happen

Emergencies happen, just as life happens. If you are prepared with and empowered by familiarity of credit card terms and charges you can make good financial decisions. We are happy to provide information we believe will make your life easier just when you really need a break. If you are in the market for a credit card, review our selection and choose the card that will work the hardest for you without breaking your bank account. Payday loans are also an option. Some experts believe they are less expensive in the long run…do your homework. Compare, compare, compare…

Apply online with confidence. We care about your security.

Published: March 19, 2008

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