If you are short on cash, you may be thinking of taking out a cash advance. There are two types of cash advance; a cash advance is an option offered on many credit cards, and there is a payday cash advance, also known as a payday loan. See our article on payday loans for a detailed explanation of that type of cash advance.
The first sort of cash advance is taken from a credit card. Generally, when you sign up for a credit card and are given the terms and limits, the cash advance limit is already set up. This, however, is a costly way to get a hold of fast cash. Many card issuers calculate fees on a percentage basis, which typically ranges from 1 per cent to 4 per cent. Other issuers charge "flat fees" for advances. Before you take out any cash advance from your credit card, learn what you will be charged, and try to avoid withdrawing money from an ATM machine on your credit card wherever possible.Be aware of the interest rate charged on your credit card cash advance. The rate charged is generally several points higher than what you would be charged on a standard credit card purchase. And, as opposed to interest charged on credit card purchases, which begins to accrue after your first payment due date, interest on credit card cash advances usually begins accruing immediately. You will also want to check with your company regarding repayments. Often the credit card companies will apply your monthly repayment to credit card purchases first, leaving the cash advance amount growing daily. If you begin to rely on cash advances and/or cannot pay the cash advances off immediately, you should look into some sort of debt counselling or a debt management plan.