I spent my 20s mismanaging my money, and came to regret all of those impulse purchases placed on credit cards when my credit score plummeted due to missing a few payments. I didn't learn how much this would affect my life until I was denied for both an auto loan and mortgage in the same year due to my bad credit score. I spent the next few years cleaning up my credit report and putting every extra penny I had toward old debts. Having to put my impulse spending on halt was difficult at first, but it was a great learning experience and I now realize how rewarding saving and investing money really can be. I have put a lot of research into good money management techniques, so I decided to start a blog to share what I have learned with anyone who needs help!
When you own a credit card, you have the power to tap into your credit line to withdraw cash at an ATM. This might seem like a useful idea under circumstances where you can only get by on cash. For example, you might have an emergency and the service you require only takes cash. Or, you may have discovered that the check you mailed will bounce unless there is enough money in your bank account. While cash advances should be used sparingly, as long as you understand the basics, you can use cash advances responsibly.
Cash Advance Interest and Fees
One of the differences between a cash advance and normal purchases is that you are immediately required to pay interest and an initial cash advance fee. For example, if you purchase shoes with your credit card, you will only be required to pay interest if you fail to pay off your debt before the end of the billing cycle. With a cash advance, you will be charged interest immediately. For this reason, you will want to pay off your cash advance as soon as possible.
Avoiding Cash Advances
To try to avoid needing cash advance, make it a habit to always have cash on you and build an emergency cash savings for when you are suddenly short. When there is an emergency, make sure that you actually need cash. There may be an alternative solution to your problem. Don't assume a vendor won't accept cash, since it is easier than ever for vendors to accept credit cards.
Preparing for a Cash Advance
Before you begin using cash advances, make sure to read all of the fees and terms. This can help you determine if the cash advance will be right for you. If there is something you don't understand, contact customer service. Also, know your cash advance limit. This is usually less than your total credit limit.
The best credit card to use with a cash advance is one that has a $0 balance. This is because of the order at which your balances are paid off. If you have a credit card that already has a balance, it will take you longer to pay it off.
If you need a cash advance, head to the nearest ATM. Most ATMs allow you to make cash advance withdrawals, though some don't. Also, the ATM may charge an additional fee. To avoid this, find an ATM associated with the bank that issued the credit card.
Share16 July 2018
