A cash advance can be immensely helpful to your credit score, and can help you quickly meet temporary financial needs. You can use a cash advance to help pay your credit card or car payment in order to avoid late fees and a reduction in your credit score. As long as you borrow wisely and pay the loan back quickly, it can only help you. But there are risks of taking out a cash advance that you should never ignore.
First off, cash advances aren’t usually free. Some online cash advance lenders offer a free first cash advance. But after that, there is a fee. If you pay the loan back in full with your next paycheck, then you will only need to pay the minimum fee. But the longer you extend your due date, the more interest you have to pay. You could end up racking up hundreds of dollars in interest, when you only needed a couple hundred to make that car payment, which is why lenders recommend you borrow only what you need and something you know you can pay back on your next payday.
So how do you know before hand if you’re at risk for getting into debt? One simple question can help you figure it out: “Do you spend more than you make?” If you’re living above your means, then yes, you’re going to get into debt eventually. One way to avoid getting further into debt is to sit down and create a realistic budget. Pay off bills and get the necessities first. Then, if there is extra cash you can either pay down any current debts or stock that money away in a savings account.
A cash advance can help you with immediate financial pickles, like an unexpected doctor bill or car repair, but it is not a long-term solution for your debt. When used correctly and responsibly, a cash advance can get you the cash you need quickly without the waiting periods of other lending institutions.
Through careful money management and budgeting, you can keep your spending in check, occasionally using a cash advance to keep from going into debt. Just remember one thing: cash advances are only a temporary financial band-aid and must not be part of your long-term financial plans.
