What To Do Instead of Using Cash Advances
Read your terms and conditions carefully to ensure you’re aware of the fees, interest rates, how payments work, and any penalties involved with using your credit card for cash advances.
However, to avoid using cash advances try these options instead:
Determine If You Really Need the Money
Once you’re aware of how much it will cost to take a credit card cash advance, determine if you really need the money, if you can make do without, or if you can manage with a smaller amount. Let your budget be your guide, not only to determine if you need the money, but how you will manage repayment.
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A Private Loan from Family or Close Friends
If your parents, grandparents, or other close family member or friend has the means to lend you money, working with them to draw up a private loan and concrete repayment plan would free you from steep interest rates and fees tied to cash advances. If you lay out the parameters of the loan and make repayment them a priority, this could be your saving grace.
Withdraw from Your Assets
If you own a home or have savings in a retirement savings plan (RRSP) or a tax-free savings account (TFSA), you could consider taking equity out of these assets to free up some cash. Talk to a financial advisor before you do so, however, because some withdrawals could lead to paying taxes and penalties. It’s also always harder to save than it is to spend so taking money out of long-term savings to pay for needs now can leave you short in the long run. While taking money out of an RRSP is a debt relief option, it’s one we only recommend using as a last resort.
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Ask for a Bank Loan, Consolidation Loan, Line of Credit, or Credit Card Limit Increase
If you’re a responsible account holder with a solid credit rating, and a positive relationship with your financial institution or creditor, you could ask for a personal loan, line of credit from your bank, or an increase on your credit card limit – a trio of options that could get you more cash in the interim. In these instances, your interest rates would be lower than cash advance rates. You might also benefit from a debt consolidation loan – another question to ask your lender before you take an expensive cash advance.
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Emergency Savings Fund
If you have an emergency savings account, now might be the best time to use it. If you’re in dire straits financially, your emergency savings fund may be a better bail out plan than a cash advance. Just make sure to replenish this account as soon as you can!