Credit Card Cash Advances
Credit card cash advances are a dangerous alternative to payday loans.
While the APR is much lower than that of payday lenders, credit card cash advances are expensive loans that carry risks.
The APR on payday loans can range from about 200% to 1500% or more.
Credit card cash advances have an APR of around 36% – much lower than a payday loan but very expensive credit nevertheless. Carrying a $1000 balance for too long could cost hundreds of dollars in interest.
Credit card cash advance fees may vary. Some charge a flat fee, some a percent, some even both. Be sure to read the fine print.
Interest charges accrue immediately – there is no grace period. Even if you pay off the entire balance at the end of the month, you will still be charged interest.
If you do get an advance, do not use an ATM machine. The bank that owns the ATM will charge an additional fee for cash advances.
Another risk of credit card cash advances: if you cannot pay off your entire balance at the end of the month, payments will be applied to your purchases first and cash advances second. If you cannot pay off your entire balance at the end of the month, expect higher interest fees.
Remember:
It is better to chew your arm off than carry a credit card balance. Credit card cash advance interest rates are evil. Compared to payday loans, however, they are the lesser evil.
Before considering credit cards, be sure to exhaust all other alternatives to payday loans.
If you do decide to use a credit card, pay off the entire balance as soon as possible.
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