Read the Fine Print Before Taking Out a Credit Card Cash Advance
Rebecca A. Smith
Most people do not read the fine print on banking agreements; cash advance loans, and other financial documents. There are several contributing factors for this fact: legal jargon is convoluted and hard to understand; the reading is incredibly dry; the borrower trusts the financial institution he/she is dealing with; the document looks the same as a thousand other documents that the borrower has previously encountered– all understandable reasons that probably sound very familiar.
While this is a common approach to business documents, it is not the best approach. Frequently, the fine print and dense language of these types of agreements are integrally important for the borrower to thoroughly know and understand. Not knowing what one is signing can lead to a multitude of financial and legal issues. Thus, it is imperative that the signee is taking the time to comb over the details. This is particularly true for credit card agreements.
Credit cards are an integral part of our financial culture and, in many cases, they can be incredibly useful. Most people probably glance over the handy reference guide that comes with a card agreement, but fail to read each section to determine what costs what. Some may be surprised to find that APR\’s fluctuate based on the type of credit being used. This is particularly true of credit card advances or taking out a cash advance or payday loan from an online or in store lender.
The instantaneous cash can help those in a bind, providing relief when an unexpected expense arises and the bank account is low. However, the interest on such advances is generally much higher than the normal purchase interest. Furthermore, the interest-free period offered by many card companies does not apply when cash advances are utilized. Thus, a higher, instantly accruing interest rate goes into effect, costing the borrower more money in the long run.
When misused or abused, credit cards, and their advances in particular, can cause more trouble than they are worth. Credit card usage constitutes the third highest source of debt in America, following only mortgage and student loans. Clearly, Americans have a tendency to over rely on credit. The current state of economy has made life more difficult for many American families, causing financial strain.
Unemployment rates have peaked and the job market has stagnated, making it more and more difficult just to get by. Those with access to credit cards may use cash advances as a way to pay bills or cover expenses, as it appears to be the lesser of two evils: if it comes down to taking out a credit card cash advance or going with electricity, many will, understandably, take the advance. Yet, these types of services only postpone the issue rather than solve it.
Credit card debt is also a contributing factor for bankruptcies in America. If one is unable to pay their bills, it is likely that they will be similarly unable to pay their credit cards off. As such, interest grows and debt compiles, leaving the borrower in dire financial circumstances. Although there isn\’t an easy solution, steps should be taken prior to using credit advances to ensure financial health.
Credit card cash advances cost the borrower a significant amount of money. With higher interest rates, transaction fees, and the instant accrual of interest, these advances end up being more costly than one may presume. Reading the fine print before using such services may help save a borrower a lot of money and hardship in the long run. A responsible lender will make a point of going over your loan documents to ensure you are fully aware of the rates, charges and fees that go along with your loan.
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