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Cash Advance Loans > Dependency on Cash Advances Cost you Heavily
Dependency on Cash Advances Cost you Heavily |
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Credit card cash advances can be a convenient and instant source of hard cash when you are in dire need of finance but they are encumbered with high fees, exorbitant interest rates and no grace periods, which should deter customers from availing of the same. They are also a major hurdle for consumers seeking debt relief. The following guidelines should make you aware of the pitfalls associated with cash advances. Fees in respect of cash advances may vary and they can be very costly too. There are two types of fees. The first type is on a percentage basis, which ranges from 1%-4%. The second type is the flat fees for advances and it is always the same, irrespective of the amount of the advance. Card issuers sometimes combine both the types and use the same to their advantage as the total amount of the fees goes up. You must read the terms of the card agreement very carefully and be aware of the various stipulations. An issuer may charge x% for an advance and a minimum charge of $10 regardless of the amount of the loan. Another issuer may charge x% for an advance or $20, whichever is greater. There are others who do not charge any fees at all. One such issuer is Pulaski Bank (featured card), located in Little Rock, Arkansas. You should avoid using ATM machines for getting an advance as the financial institution that owns the ATM charges an additional fee. Consumers who decide to avail a cash advance must be very careful regarding the finance and interest charges as they are much higher than the normal purchase interest rate (the rate that is associated with everyday card purchases). Whereas the average purchase rate for a standard credit card ranges from 12.75% to 13.47%, the cash advance rates normally range from 20% to 25%. There are, however, a few issuers who maintain the same rate for both purchases and cash advances. Our Low Credit Card Rate Report will give you more information regarding the above. Cash advances are not subject to a grace period as they start accruing interest immediately and as such even if you pay your card balance in full when your bill arrives, you will still be accessed a finance charge for any advances. The manner in which payments are applied to your account also needs to be looked into as many issuers apply payments to card purchases before they apply payments to cash advances (i.e. payments are first applied to purchases). Moreover, there can be a dramatic increase in your finance charges and overall interest rate, if you carry a balance on your card. Credit card checks are usually treated as cash advances and provide an easy way for the card issuers to pay off the bill of your choice or to acquire some extra spending money. Using a check, though convenient can be very expensive. Balance transfers are also treated as cash advances. Bank charges have gone up because of the ignorance of the average consumer who does not realize that using an ATM for cash advance involves two fees when they use another institution's machine. The customers rarely check the fees and charges imposed by the banks but they should realize that banks must disclose these charges, by law. It is obvious that if cash advances are used very often, the consumer must be in serious debt problems and needs debt relief counseling. It is very easy to fall into the trap of cash advances as they are so tempting and you need to be restrained in your expenses. The following points need to be noted: 1) Use a debit card instead of a credit card to regulate your expenses, in case of cash advances. 2) As card issuers credit your payments on purchases first, you should repay cash advances as soon as possible. 3) Do not go berserk with too many cash advances. It will be difficult for you to pay back. |
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