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The Real Cost Of Cash Advance
By Roberto Bell
One of the most expensive loans in the financial market is Cash Advance, a cash loan obtained against your credit card's account balance by means of which you can withdraw money from an ATM, bank, or branch of a financial institution.

Although you can borrow up to a certain percentage of your overall credit limit, the easy procedure to obtain Cash Advance may lead you to costly mistakes that you can easily prevent by following a few guidelines.

Safety and soundness of a financial institution can easily be found at the Federal Deposit Insurance Corporation (FDIC) entity, which supervises the compliance of institutions that offer Cash Advance programs.

Because applying for Cash Advance is a very easy and quick procedure that does not require paper work, the FDIC recommends everyone to pay attention to the "fine print" of a deal before your debt can increase considerably.

The high-risk nature of Payday Loans and Cash Advance lending strives in that the amount of money that you receive is put on your account as a separate outstanding balance. So if you are paying "x" interest rate for your actual credit, the money received as Cash Advance is subject to additional interest charges, usually at a higher rate.

Although, it is matter of common sense to repay Cash Advance loans as soon as possible, any payment made will be applied to reduce your outstanding credit card balance prior to

the payment of Cash Advance. If you fall behind on paying your debt or fail with an ordinary credit card payment, the money you are considering as a Cash Advance repayment will be applied to your ordinary credit line. This way more interests will be accrued to the Cash Advance if is not enough to cover the outstanding balances.

Cash Advance and Payday Loans are short-term loans priced at a fixed dollar fee, which cost in so short term to maturity is translated into the higher annual percentage rate (APR) among all other type of loans.

Getting cash from an ATM after receiving a Cash Advance also has an interest charge that is applied immediately, since there is no grace period. Some credit card issuers require that you withdraw money from a bank's ATM, in which case both the credit card issuer and the bank will charge an additional transaction fee, whether a small percentage of the cash advance, or a flat dollar fee.

Reading and understanding the terms of Cash Advance loans is your best protection to avoid overwhelming debt on your credit cards so leave this type of loan as your last resource for a moment of a real cash necessity.

Vigi Floyd is an expert on Cash Advances and Payday Loan lending.

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