How Cash Advance Works on Credit Cards
One of the issues that has been put to us countless times when the theme is credit cards is what it is that is cash advance, how it works and what are its advantages and disadvantages.
In order to clarify any doubts you might have, Loaven decided to create this article that explains to you in a simple way how cash advance works on credit cards.
What is cash advance?
Although many people do not know, cash advance is an increasingly recurring feature on credit cards, and it allows your homeowner to raise money directly from the ATM (without having money in the account once the withdrawal is done by credit card).
There are more and more banks providing their customers with this type of additional service, of which we can highlight:
- American Express;
- General cash deposits;
- New Bank;
- Deutsche Bank;
Compare also: All credit cards with cash advance
Although it is a very practical solution (and advantageous in some situations), it should not always be taken lightly. Now see the main advantages and disadvantages of using cash advance on credit cards.
- Lets you raise money even if you have no available balance;
- It helps you to “unravel”;
- It is great for short term loans;
- It allows you greater autonomy and security (since you know you always have money available);
- Quick access and increasingly easier;
However not everything is simplified, the recurrence to cash advance can also have some disadvantages, of which we enumerate the following:
- Very high interest rates;
- Snowball effect;
- To be used frequently;
Although at first glance the disadvantages are much less than the advantages, we assure you that they are sufficient to consider well the use of this type of “loan”, now see:
- Since the interest rates are very high, for a little money advance you will pay a lot more than what you raised. If it is one or two annual uses you may not notice a big difference, but if it is something recurring and make the calculations at the end of the year of the interest you paid you will see that a lot of money is “lost” in interest to the bank.
- If starting out being a sporadic use may not be a big problem, however the “snowball” effect is very easy to be achieved. This is enough for you to start appealing more often than you should and to start using the money that is “given” to you so easily to pay off other credits.
We hope that with this article you have come to understand a little better how cash advance works and what are its advantages and disadvantages and what it does. If you have any questions or concerns, feel free to contact us. We will try to respond as soon as possible.