When financial difficulties are an issue, many people turn to a credit card cash advance or write out a credit card cheque to help make it through to pay day. The problem is that credit card cash advances charge an even higher APR than normal credit card debt. Does a credit card cash advance help someone to make it to their next wage or is it a source of long term personal debt?

What is a Credit Card Cash Advance?

A credit card cash advance is an opportunity for someone to borrow money against their permitted credit limit. A credit card cash advance doesn’t simply extend to withdrawing money from a cash point machine, it can also be a credit card cheque or a gambling transaction.

Advantages of Credit Card Cash Advances

  • Short term financial difficulties. A credit card cash advance helps people that are struggling with financial difficulties. It becomes possible to make essential payments, such as buying food and paying the rent;
  • Convenience. Applying for a loan or overdraft increase can take time. However, a credit card cash advance simply involves going to a cash point machine or writing out a credit card cheque;
  • Emergency situations. There may be nowhere that will take a credit card once it gets late. A credit card cash advance may help cover an emergency situation, like being able to afford a taxi home when there are no other sources of public transportation available;
  • Bad credit. Having adverse credit means that other sources of credit may not be available to a borrower. Those with an existing credit card can get an advance. Although it is a high APR, the interest rate is still considerably less than many bad credit bank loans or payday loans.

Disadvantages of Credit Card Cash Advances

  • High APR. Getting a cash advance results in the borrower being charged a higher rate of APR than credit card debt. To make matters worse, subsequent repayments pay off the low APR credit card debt before the high APR debt;
  • Additional fees. Most card providers not only charge a high APR on credit card cash advances, but they also impose a further fixed fee for the transaction itself;
  • Too easy. Getting a credit card cash advance can become a little too easy. There is a tendency to turn to a credit card cash advance or write out a credit card cheque each time a person struggles with financial difficulties. This can accrue a lot of high APR interest, not to mention additional fees;
  • Personal debt. After getting a cash advance or using a credit card cheque, a large number of borrowers only make the minimum monthly payment. This serves to exacerbate personal debt problems, particularly for those that seek a credit card cash advance the next month.

A credit card cash advance may offer a lower APR than a payday loan, but it should still only be used in an emergency or by those that have a bad credit rating. People with good credit should seek to get a short term extension to their bank overdraft.

Considering a new home purchase, let alone actually pulling the trigger so to speak, is a very stressful situation. Old mortgage, new mortgage, Bankers, Realtors, Lawyers, interest rates, down payments, etc. are more than enough fuel to make the most intelligent among us a little woozy. Within the actual process, timing is critical, as what one may consider a great deal does not come along frequently. That’s why it’s called shopping. What may work logistically, professionally, or aesthetically make not work financially, and vice versa.

For the reason of explanation, let’s examine the following hypothetical instance.

You notice a house that You have always admired has a for sale sign in the yard. After making a few telephone calls,you discover the house is reasonably priced and you would love to purchase it. The thought process tells you to sell the current house, buy the new house, and all is good. The problem is the new house will go quickly, probably well before you can sell your current house. However, you already have an existing mortgage, and current cash reserves are low for whatever reason, let’s say your kid’s college tuition. You need down payment for the new house, have to make the old mortgage until it sells, and are assuming a mortgage on the new house. Right about now depression starts to set in as reality just gave you a hard slap.

Being the creative, industrious soul that you are, you look into a home equity loan or line of credit on your existing home. After finding this is not an option either, it is now time to abandon all hope, right? Well, there is a chance….

A Bridge Loan may well be the answer to the dilemma. By definition, a Bridge Loan gaps the bridge between the time frame of selling the current house and buying the new home. The loan is attached to your current mortgage, and allows you to get down payment and in some cases fees for the new home and as such is not subject to credit checks. The duration of the loan may be as short as a few weeks up to several years, and my be open or closed ended. This is a viable solution if you are reasonably certain your old house will sell at a decent price in timely fashion. In many cases, there is a “grace period” where you will not have to make any payments on the Bridge Loan for a few months, thus possibly enabling you to sell your old house before a payment is even due. Sounds great if all the stars line up perfectly, if not, consider the following.

The drawbacks for utilizing a Bridge Loan are an issue. Loan origination fees, accruing interest, and in the worst case scenario two mortgage payments are cause for concern. Additionally a Lender will usually insist an applicant be qualified to carry two mortgages, and you may not qualify. Many financial institutions will not even consider a Bridge Loan for a number of reasons, including the risk involved in speculation. Interest rates for a Bridge Loan are higher than an equity line of credit. If the original house does not sell, you now face double property taxes, maintenance costs, and mortgages.

From a purely personal perspective, Bridge Loans are not for everyone. While they do serve an important purpose, they are, by nature purely speculative, and as such pose a threat of default. Even if a buyer is able to secure one, they are not for the faint of heart, or compulsive worriers.Many business have gone bankrupt attaining loans as expansion capital based upon unfettered optimism, only to succumb to reality. The best advice when pertaining to Bridge Loans is to evaluate the worst circumstance, and weigh if one could survive it financially.

A lot of my friends struggling with money, it is difficult for them to go out with family and friends to have fun and do things other than eat and hang out on campus and go on trips during Winter and Spring breaks.

Luckily, I have my extra loan money. If I did not have this money, I have no idea how I would be able to go out and have fun. Sure, I am borrowing the money but for the moment I am able to go out and have fun. I am not limited to go out to eat, go do fun things with family and friends, or to go shopping on the weekends. I do not feel like a struggling college student, but I know I will suffer from this in the end.

Is it alright that I’m spending money now that I will need to pay back later? I am not sure I am alright with this. I had to take loans from the bank to pay for school because my parents decided not to support me, and just put me out in the real world on my own. They decided this with no warning, so it came as a shock to me and I had no money saved up to pay for college.

At first, it seemed like the only option. After awhile, I have realized I could have gone to a community college instead of attending a University of California (UC) and taking out loans I will need to pay back later. Loaning money to people so young kind of tricks them. I feel like I was tricked to think I have this money to spend as I please now, but in a few years I will be struggling to pay back these loans. I am not quite sure being in debt right after graduating from college will be worth it.

College loans allow students to go to college and get a good education, but it makes it more difficult once the student is out of college and thousands of dollars in debt. After thinking about this, I do not want to take anymore loans to pay for college because I do not want most of the money I make from my first job to go to paying for college. I want to be able to spend that money on myself and starting my new life. Some people would say I am throwing away a good education, but in the end I think I will be happier going to a community college next year and saving money rather than attending a UC and spending thousands of dollars I could save.