I have just started a small business, and I can not get a small business loan. I need cash from time to time. Should I take a credit card cash advance when I need money? I need to add that I do not have good credit. I have experienced some financial hardships, and this is the only credit card I have left. I have a three thousand dollar line of credit with a zero balance. I was able to pay off my credit card debt, and I am now in the process of rebuilding my credit. Using my credit card in this way gets me nervous; I am afraid I will rack up debt on this credit card. Is a credit card cash advance the best way to get a cash loan?
Jerry C.
San Antonio, TX
Taking a Credit Card Cash Advance What are the Risks?
Jerry congratulations on starting your new business. This must be an exciting time for you. I can understand why you are worried about racking up new credit debt. Given your past, I would agree with you that a credit card cash advance is not something I would recommend you often do. It depends on your situation. Do you need the money to make an investment that will increase your cash flow? If you can grow your business, and pay back your loan in a short period, then you should take a credit card cash advance. Jerry if you plan to buy brand new office furniture then you should keep your credit card in your wallet.
Remember to make a credit card cash advance through your credit card you will need your pin number. Otherwise, you will not be able to take money out through the ATM. If you don’t have your pin number, you can call your bank. They will ask you a few security questions. They should be able to give you or send you a new pin number. When you use your credit card and pin number at an ATM, you will be charged at least 2%. This fee is standard to take out a cash advance loan using your credit card.
You have another option that you can take. You can take a cash advance pay day loan. Getting a payday loan can sometimes be more difficult if you are self-employed. I am making this suggestion because if you take a payday loan, you will have all the incentive to pay this loan off as fast as possible. Payday loans charge a high rate of interest, but they can be a good way not to use your credit card. Only use this option if the loan you need is short term.
Jerry, you have mentioned that you are trying to build your credit. If this is the case, you should not use more than forty percent of your credit line. Doing this will help you to increase your credit score faster. When a person limits the use of their credit card, it is perceived by the credit bureaus, that this person is in sound financial health. This is the reason for why your credit score would increase.
I hope this helps you Jerry and good luck with your business and rebuilding your credit. It seems that you are well on your way to having success in both endeavors.
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