Things to consider before taking out the credit card

With more than 20 million people filing for unemployment recently, paying the bills is a struggle for many. And if you don't have an emergency fund, you can resort to other options to make ends meet. If you've lost a source of income or can't pay your bills, the opportunity to get a cash advance with your credit card may also be a viable option. But it is? This is what you should think about before resorting to plastic.

What is a credit card cash advance?
A cash advance is money that is borrowed from your credit limit. credit card, instead of your bank account balance. If you have a PIN set up for your credit card, you can withdraw the money advance from an ATM. You can also go to the bank with your card to request a money advance.

Get a cash advance with your credit card It does have some advantages: It's quick and easy to get, it doesn't require you to have money in your bank account, and there's no approval process either. Unlike a loan from a bank, you do not need to go through a credit check or present any documents.

Cash advances aren't as bad as payday loans when it comes to interest rates, but that's not collateral. Payday loans are notorious for their exorbitant fees. For two-week loans, interest rates can range from 390% to 780% APR. Short-term loans have an even higher APR. Rates are even higher in states that do not cap the maximum cost.

Credit Card Cash Advances: The Disadvantages
The benefits of a credit card cash advance pretty much end here. The quick fix has consequences.

Additional charges
Your credit card issuer will likely charge you an additional fee (typically $3% to $5% of the total up front, with a $10 minimum), he says. And if you use an ATM that's not affiliated with your credit card, you'll rack up even more fees.

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We see that many borrowers carry the amount they owe on the card considerably after a cash advance, eating up available credit and putting them at risk of additional fees and larger monthly payments.

It could affect your credit score
Understand, too, that adding to the balance of your credit card it will increase your credit utilization and work against your credit score. The higher your credit utilization, the greater the negative impact on your credit score, since your amounts owed account for 30% of your score.

There is no safety net if your money is stolen
You are out of luck if your advance money is lost or stolen. You don't have the safety net that you would if there was an unauthorized transaction on a credit card.