What are the downfalls to a cash advance on a credit card?
Question by Tom W: What are the downfalls to a cash advance on a credit card?
I need a 3000 dollar loan for a car, but my mom says, to avoid full coverage insurance, we get these cash advance credit card things in the mail all the time where you can take 3000 out of the credit card then pay it of, but i dont know if my mom know hat shes talking about, because I dont want to be paying this off for the next 10 years
Best answer:
Answer by Michelle
1, Cash advances on a credit card come with high interest rates, meaning that in the longrun your car will be more expensive.
#2, IF something happens to your $ 3,000 car (broken, wrecked, etc…), you still have to repay your loan. – If you had full coverage with the option that your insurance company would pay off your car, then you wouldn’t have to worry about what happens if your car gets smashed a week after you get it.
Then again, $ 3,000 is pretty cheap for a car. So the risk might be worth it to you. … I would also look into the option of getting a “personal” loan from a bank. If you qualify, the money would be yours to spend on whatever you want. But they would not be able to force you to buy more insurance coverage than you want.
What do you think? Answer below!
Be VERY careful. Those cash advances are a mug’s game. The way it works is that they will offer a really great rate on the advance. It might be just a few percent, as opposed to the normal 18-20%.
But here is the drawback: if you take the advance, and payment you make will go against LOW interest amounts first, leaving any other balance at the higher rate. If you normally pay off your balance every month, you will suddenly find that you are carrying that money as a balance, at the HIGHEST rate on the card.
The ONLY time the low interest offers will work is if you do not use the card for ANYTHING except the loan.