Cash Advance
It's the end of the month and you are not going to have enough money to pay all your bills after an unexpected car repair incident. So, the thought occurs to you that "I could just get a cash advance on my credit card." A cash advance lets you get a loan from your credit card, and just like any loan you need to pay it back with interest. But you want to look before you leap.
First, you can't get cash advances up to the full limit of your credit card account, as it's usually capped at a few hundred dollars. And unlike a regular credit card purchase where you have a "grace period" before you start paying interest on the purchase, cash advances start accumulating interest on Day 1. And that interest rate will usually be higher than a regular credit card purchase.
In addition, there could be cash advance fees and possibly ATM or bank fees. The best way to avoid the situation is to start an emergency savings account, so you won't feel desperate to get loans such as cash advances when you're in a pinch. Those loan sharks are always hungry...and you're salmon, in case you were wondering.
Related or Semi-related Video
Finance: What is a Credit Limit?39 Views
Finance, a la shmoop. What is a credit limit? Alright people well simply put the
maximum amount you get to charge or use on a loan or credit account, that's a [Credit limit definition written on a 100 dollar bill]
credit limit. So yeah it's that thing that keeps toddler Joey from ordering
two hundred thousand dollars worth of Snickers bars. [Toddler looking at the snickers bar]
If you accidentally you know leave out your Amex. (Illustrative example time) If you have a ten thousand
dollar line of credit or credit card you can't spend $20,000 on a trip to Vegas,
sorry. You might be able to go on a smaller trip to Atlantic City but once [Picture of Atlantic City]
you hit that 10 grand well the party's over until you pay some of that money [$10,000 flashing in red]
back, and by the way taking that smaller trip and then putting everything on red [Chips landing on a roulette table]
22 in hopes of funding your next trip to Vegas? Probably not the soundest
financial planning... sorry, let's keep it real. [Guy putting on a serious face]
Up Next
What is a line of credit? A line of credit is kind of like a loan. A bank gives a borrower a line of credit, which basically says they can borrow â...
What are Credit Scores and Worthiness? One of the most ubiquitous ways that digital society now dictates our lives is with business and personal cr...
How do credit card companies work? Credit card companies are, in a way, lenders. They give consumers a rectangular piece of plastic that allows the...