Article  When is a Good Time for You to Get a Cash Advance? In most things, if you can get it fast and without much hassle, there’s generally a catch; with money, this is almost always true. Fast cash is never free, and can often come at a much higher premium and a risk of getting in over your head. When money is easy to come by, it’s also very, very tempting. All of this can create a really dangerous situation if you don’t know how to use credit wisely and effectively to cover your needs without getting you into a situation you’ll have difficulty getting out of. So when is it a good idea for you to get a cash advance? First of all, know what a cash advance is before you even contemplate it. Most credit cards have a cash advance option, allowing you to take out as much cash as you have available credit. What the credit card companies do is charge a separate rate than your typical purchasing rate, and that rate is typically much higher. Not only will a higher rate apply, but the cash advance then becomes the last thing you pay off. For example, if you have a credit card balance of $2,000 and you put on a $50 cash advance, you won’t get rid of the higher rate on the $50 until you pay the $2,000 first, so you often rack up more debt than you got through your initial withdrawal due to interest fees. That being said, a cash advance still can be beneficial in other situations. While the rates and the interest fees are reasons to be very cautious with a cash advance, it can also be a good option to cover short gaps in cash flow. For example, if your paycheck was delayed a few days and your rent is due today, then it’s not a terrible idea to take out the money in a cash advance. In fact, if you have no other credit card debt on that card and are able to pay back the loan before the end of the month (for example, when you get your paycheck) you will be able to use your cash advance without ever having paid the higher interest rates or fees of any kind (this varies; some cards do apply an immediate fee). With this situation, a consumer is able to use the tools they have available to them wisely and with discretion so that a slight gap in payment doesn’t have to be something that is financially damaging (either through missing a payment or through loading your card with hefty interest rates). It would not be a beneficial situation, however, to use a cash advance to cover payments when you have no reasonable expectation of funds coming in. That is indicative of an already bad financial climate that would only be exacerbated by the use of a high-interest cash advance that isn’t able to be repaid within a short time frame. Even if you cannot repay a cash advance before the end of the month, it should be within a month or two or the cash advance will become more of a financial burden than it was originally worth. Cash advances can be exactly what they seem—money when you’re in a bind that can cover you over without having to apply for an additional loan or sign over any collateral. Ideal for smaller sums of money, they can really help consumers in need, as long as they are very conscious of the risks and make a smart, well thought out decision to use the money and repay it within a short window of time. Don’t be scared of a cash advance, just be smart about it! Category Business Author WOA Member Add To Favorites Print This Article Email Article To A Friend Post Comments   Rate This Article (0) 1 - Poor2345 - Good678910 - Excellent Added On 26 September 2009