When it comes to cash advances, don't make a decision you'll later regret
When hard-pressed for quick cash because of an unexpected expense, one option considered by many is a cash advance. But before you take that leap, take a close look at your situation and be sure you understand fully how a cash advance works, as well as the advantages and disadvantages.
The first and most common type of cash advance is withdrawing money from your available balance on a credit card. You can receive cast against your credit limit on the card by going into your bank or by using the credit card and a PIN number at an ATM. Keep in mind that you will pay interest on this cash, just as you would with any other type of loan.
Credit cards often allow consumers to take cash up to the card's credit limit, or may impose a reduced limit for cash advances.
Another option is a payday loan. This type of loan allows you to get cash fast, and usually requires you to provide a pay stub to verify employment, a bank statement and a photo ID. There are storefront businesses seemingly on every corner that offer this type of loan, and there are also a myriad of online companies that do so as well. These loans require that the consumer make payments, or authorize an automatic bank withdrawal, and there is, with some of them, no credit check. Many, however, do require a credit score.
Overall, cash advances have several disadvantages. They often come with high interest rates and fees. This is particularly true when it comes to payday loans. Both of the types of cash advances discussed here penalize customers for payments made even one day late, often raising the interest rate as a result.
So when looking at getting the quick cash you need, be sure to weigh all your options and read the fine print before you sign on the dotted line. Don't get rid of a quick problem with quick cash by creating a long-term financial headache.