Have you even been short on money and decided to just withdraw what you need through your credit card at the ABM to make ends meet? If so, here are four things to be aware of before you decide to borrow against your credit card.
- ABM Transaction Fee—if you’re looking to access cold hard cash, you’re going to get hit with a fee of at least $2.50 and it could be much higher depending on the ABM you’re using or if you are outside of Canada.
- No Grace Period—typically when you purchase goods on your credit card, there’s a grace period of at least 21 days where you don’t pay interest on the amount, but with a cash advance interest starts accruing the day you access the fund. And if that’s not bad enough, with cash advance the interest rates could be higher than the rates on a direct purchase. For example, on a typical Visa reward card, if the purchase interest rate is 19.99%, the cash advance rate could be 21.99 or higher.
- Throw off Repayment Plan—if you have purchase transactions on your credit card and then you get a cash advance and you’re not paying off the balance in full each month, this could throw off your repayment plan. Before doing a cash advance, read the fine print on your credit card statement to see how your payments are applied to the two different types of transactions.
- Reward points—If you are using your credit card because you like to collect points like AirMiles, Cashback or store point, note that you won’t collect reward points for cash advances.
So the next time you need to withdraw money, think about using alternatives like a low-interest credit card with a fixed interest rate for purchases or cash advances. You could also consider getting a *Cash Crunch loan with 12% interest rate from First Calgary Financial.
Where do you draw money from when you’re in a bind? Comment Below.
*Only available for individuals that have a relationship with Momentum. To find out more, you can stop by our office or contact us at 403 272 9323