Tag Archives: loans

Everything You Need to Know about Credit Card Cash Advances

Credit card cash advances are amounts of money which people are permitted to “borrow” from their credit card companies. These advances are generally processed via ATM withdrawals or deposited checks. Unlike other types of loans, credit card cash advances almost always come along with hefty interest rates, usually notably higher than the interest rate of the associated credit card. Furthermore, the interest tied to credit card cash advances generally begins on the day one borrows the funds.

There are a variety of reasons why an individual may consider taking out a credit card cash advances. In most scenarios, doing so is ill-advised, but regardless of the decision which one ultimately makes, having an awareness of the following information is paramount.

There are Many Strings Attached

One of the massive pitfalls of credit card cash advances is the plethora of attached strings. As previously stated, credit card cash advances generally come along with sky-high and immediate interest rates. ATM fees are also part of the deal, as are payment allocation rules. Of course, certain logistics will vary depending upon the bank/credit union and their rules regarding credit card cash advances.

At the end of the day, credit card cash advances are not truly worth it. The amount of money will which be paid in combined interest and fees will undoubtedly surpass the amount of originally borrowed funds. In essence, someone who takes out a $500 cash advance may wind up paying $1000 (or more!) by the time they’ve covered all of the subsequent monetary charges.

You Could Have Deeper Financial Issues

In light of the multiple expenses associated with credit card cash advances, resorting to taking one out could be indicative of deeper financial issues. In most cases, individuals who take out cash advances do so because they need cash, yet have no other way of getting it. Even in today’s world, there are still certain situations where merchants may not accept credit or debit cards as payments. Unfortunately, there are other people who resort to cash advances for unwise purposes, such as gambling.

How to Steer Clear of Credit Card Cash Advances

It goes without saying that the pitfalls of credit card cash advances vastly outweigh the upsides. For this reason, people should employ the proper financial strategies so they are never completely unable to access cash if they truly need it. Thankfully, there are several ways of going about this. The first and most obvious strategy involves saving money. The amount of money which can be saved will greatly depend upon the amount of one’s income and their expenses. Ideally, the former should always outweigh the latter. This, in turn, allows for people to gradually build an emergency fund to be used in times of need.

If someone’s expenses outweigh their income, then the person has a few options: increase income, decrease expenses, or both. Income can be increased by seeking a raise, requesting additional working hours, or pursuing economic ventures outside of one’s day job (such as freelance work). Decreasing expenses is viable by simply reducing the money which is being spent. Most people do this by going out less often, canceling monthly subscriptions, and shopping with coupons. This may not seem glamorous, but it certainly beats having to take out a credit card cash advance due to a lack of funds.

Finally, the best way to avoid credit card cash advances is by always having some cash on hand. This could mean storing a few hundred dollars in a safe or keeping some bills in a wallet. Regardless of the financial means one takes to save money and maintain readily available cash, just about anything is better than taking out a credit card cash advance.

 

Authored by Gabrielle Renee Seunagal

An Overview of Good Debt

The word “debt” generally has negative connotations and understandably so. Debt’s adverse impacts are extremely well-documented; it can also take years or even decades before people are able to escape its clutches. Individuals who go into debt at very young ages can often face ruined financial futures ruined and poverty. For these reasons and more, debt is overwhelmingly viewed as something to be avoided at all costs.

What Qualifies as Good Debt?

The concept of “good debt” remains highly debatable. There are many people who view debt, in any form, as negative and something to steer clear of. However, various financial experts do believe that certain types of debt can, in fact, qualify as “good debt.”

Higher Education

First and foremost comes higher education which is generally associated with going to college or university. Many individuals also associate a degree with better job opportunities and a higher quality of living. Also, it’s often stated that degrees will pay for themselves and pay for the subsequent student loans which many young adults take out in order to pursue higher education.

However, good debt is not without its risks. While many people view higher education as a source of good debt, the “good” part is contingent upon several factors. The economy, field of study, and overall flexibility of the individual at hand each play a role in whether or not student loans truly turn out to be good debt or bad debt. A rough economy can make it difficult for college graduates to find jobs and start paying back their student loans. Likewise, a poor field of study can also complicate the process of making a good living. Finally, individuals fresh out of university may have to accept entry-level jobs and work their way up to more lucrative prospects.

Entrepreneurship

As the job market becomes more and more competitive, many people are opting into entrepreneurship and starting their own enterprises. However, starting a business requires money. While aspiring entrepreneurs can seek financial backing from angel investors, venture capitalists, or even family/friends, many choose to take out loans from various institutions.

The benefits of being in business for oneself are overwhelming. Autonomy, independence, and profit growth are just the tip of the iceberg. However, these benefits only come to fruition if the enterprise is successful. If a business fails, the borrower will not only have to pay back the debt they owed (in addition to any subsequent interest), but they may also incur serious financial hardships. Like higher education, good debt in the form of entrepreneurship is a double-edged sword.

A Forewarning

At the end of the day, debt is something which should be avoided, if at all possible. While certain types of debt do have the potential to yield benefits, there are never any guarantees. Borrowing capital to pursue ventures is a trap which countless individuals have fallen into. It has worked out for some and devastated others. Ultimately, everyone has to make their own financial decisions and determine whether or not they are willing to take on debt.

 

Authored by Gabrielle Renee Seunagal