Credit Card Advance, Debt Trap Advance?
Credit card advance or more specifically credit card cash advance is helpful especially during times of emergency financial needs. It's an easy option for people to get cash instantly. But oftentimes, most people regard credit card advance as rather a patch to a cash or debt problem. While debt is something that people do not want, we can not always avoid debt. But you can minimize or even avoid using credit card advance. Here are reasons why credit card advance is debt trap advance.
Educated consumers know that a credit card advance is more expensive than credit card. Usually, there are fees that accompany advances. In fact, there are no grace periods for this. People with debt problems often resort to cash advances believing that it's an easy and instant solution to their problem. Although, they are knowledgeable of the fees, they tend to ignore them. Fees are always present in every transaction made, especially if it's about money matters. But with credit card advance, the fees are unusually and overwhelmingly costly.
There are two ways that credit card advances are calculated. One such method is used with issuers that charge, for instance a certain percentage for a cash advance but charge a ten dollar minimum fee at any amount advanced. The other method is used with issuers that charge a certain rate or twenty dollar whatever is greater of the amount advanced. It is therefore, imperative that you read first the terms and conditions stated in your credit card agreement. This is one reason why credit card advance can be debt trap advance.
Another reason is that fees are every where. ATMs, particularly, charge you when transacting your card advances through them. As mentioned earlier, credit card advances can become more costly than your credit card. It is reported that the interest applied in your cash advances are greater than those you get with your regular credit card purchases. Here is a comparison. Rates that apply for credit cards are between fifteen and seventeen percent while rates for average cash advances are between twenty and twenty five percent. Interest rates for credit card advance are again one good reason why it could be a debt trap advance.
Finally, there are no grace periods with credit card advances. The moment you received the cash, interests are stamped right away. Credit card advances are not bad, actually. But you can only avail of this, if there's an expected fund to pay for it. So be careful with cash advances. Do not let it become your debt trap in advance!
