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Credit Card Advances are Loans

A financial crisis can lead to look for obtaining quick money without measuring the consequences. Advances in credit cards are a common practice that allows you to withdraw cash immediately as loan, from an ATM or from a bank branch; however, this advance may cost more than you can imagine.

The first thing to keep in mind is that once you receive the cash you obtain a debt with the bank to which your credit card belongs, but additionally you must assume a series of additional charges for the loan. The following is what you need to consider before making a cash advance.

• The money you withdraw must be returned to the bank with an interest rate that is usually between 25% and 30%.

• You have a limit that the entity has established for the withdrawal of money corresponding to advances from your credit card, that is, you will have to verify your cash advance limit for this type of transaction.

• Analyze the situation that leads you to request the advance and if this was due to a financial emergency; do not request advances to make purchases that are not for basic needs or expenses that could wait.

• Keep in mind that interest is not the only charge that you must assume, usually this transaction has an additional charge that you must consult in advance with the entity.

• Credit card advances often have no grace period, which means that interest starts to run from the moment you withdraw the cash.

• If you make a purchase, it is better to pay with your credit card instead of making a cash advance because it will save the money of the transaction fee and the high interest rate for the cash advance that it could vary.

• Stay informed of the cash advance limit you have available, in case you need to use it in the future.

• When you start making payments, try to pay a little more than the minimum payment they ask for, so that you can cover all of your debt sooner than expected.

Choosing to make an advance on your credit card should be the last option you consider, keep in mind that withdrawing money from your credit card is a process similar to the one you do when withdrawing from your debit card since you obtain the cash from Immediately; remember that an advance is a loan because it is a debt that you acquire from the moment you receive the money.

In times of Coronavirus, banking entities have agreed to offer certain benefits to people who have financial problems, so if you are part of the vulnerable group, contact an advisor as soon as possible to analyze your situation and possible help.