A credit line is good for one thing, and one thing alone, and that is to remind you never to be in debt. Managing finances is hard, especially when there seems to be no money, and yet, everyone has needs to be met and life to live! If you are in a position to somehow get a better handle on life in general, then, that’s good. However, there are times when circumstances do get the better of you, and you need to probably take a merchant cash advance out. Here is what you need to know about it.
- If you use a credit card, then, you know that a credit card is a personal loan, given from a bank, that you use and then pay an interest on. People usually use their credit card for their day-to-day requirements. However, there are instances when you need cash, and if you have some money left in your credit card, then, you can withdraw cash – this is called a cash advance
- Cash advances are akin to a payday loan. Whatever the circumstances are, this is borrowed money that you need to pay back and probably at a high interest.
- Cash advances are expensive. Irrespective of the source of the cash advance, no one is going to take it back unless there is a profit in it for them. The only people who will lend you money at no interest are either friends or family.
- The minimum fee for a cash advance on your credit card is 5% of the amount you borrow. If you’ve taken say $100 you might not pay much, however, people usually borrow amounts closer to $500 and above, and this can get expensive for them.
- Interest rates are fairly high for these loans. They fall anywhere between 20% and 25%. More often than not, it is more expensive to withdraw cash on your credit card than it is to swipe your credit card. Despite what people believe about cash loans.
- Short extensions. If you have borrowed from a bank, you usually have around 45 days in which to payback. However, other lenders don’t give you so much leeway.