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If you’re in a bind and need money quickly, you may be wondering if a cash advance will hurt your credit score. Here we’ll break down the effects of a cash advance on your credit score, and how to keep your credit rating intact.

Impact of a Cash Advance on Your Credit Score

A cash advance can have a significant impact on your credit score. When you take out a cash advance, you are essentially borrowing money from your credit card company. This can lead to increased debt and can negatively affect your credit score. If you are unable to repay the cash advance, you may also face late fees and penalties. It is important to understand the impact of a cash advance on your credit score before you take out this type of loan.

What Is a Credit Card Cash Advance?

A cash advance is a short-term loan that you can take out against your credit card. It’s a way to get quick access to cash, but it comes with a high interest rate. Cash advances can be a costly way to borrow money, so it’s important to weigh the pros and cons before taking one out.

Pros of Cash Advances

Cash advances can be a helpful way to get money in a pinch, but they come with some significant risks. In the following section, we’ll discuss the pros of cash advances so you can make an informed decision before taking out this type of loan.

Fast Access to Cash

If you’re in a crunch and need cash fast, a cash advance can be a good option. You can generally get access to your cash within a day or two depending on who you are getting the advance from.

Can Get Cash without Good Credit Score

If you have bad credit or no credit, you may still be able to get a cash advance. This is because your credit card issuer will use your credit card as collateral for the loan which allows them to take on more risk than a traditional loan.

Limited Amount of Paperwork

Another advantage of a cash advance is that there is usually very little paperwork involved. This means that you can get the money you need without having to jump through a lot of hoops.

Cons of Cash Advances

While there are some advantages to taking out a cash advance, there are also several disadvantages to consider before applying. Here we will discuss the cons of cash advances so you can make an informed decision about whether this type of loan is right for you.

Expensive

One of the biggest disadvantages of a cash advance is that it’s an expensive way to borrow money. Cash advances typically come with high annual percentage rates (APR) and fees. This means that you’ll end up paying back much more than you borrowed if you’re not careful.

Can Negatively Impact Your Credit Score

Another downside of a cash advance is that it can negatively impact your credit score. This can be especially apparent if you fail to pay back the advance in a timely manner. This is because cash advances are typically reported to the credit bureaus as high interest debt. This can lead to your credit score taking a hit if you’re not able to keep up with your payments.

Alternatives to Cash Advance

There are several alternatives to cash advances that may be better options for you. The following will discuss some of the best alternatives to a cash advance so you can decide what is best for your situation.

Buy now, pay later services

Another option is to use a buy now, pay later service. These services allow you to make a purchase and then spread the cost out over time with no interest. This can be a good option if you need to make a large purchase but don’t have the cash on hand to pay for it all at once.

Personal loans

Personal loans are another alternative to cash advances. They typically come with lower interest rates than cash advances, which can make them a more affordable option. You may also be able to get a personal loan even if you have bad credit.

Reducing your debt

If you’re looking for an alternative to a cash advance, reducing your debt can be a great option. Debt settlement is a great way to reduce your debt without having to pay the full amount. With debt settlement, you work with a company to negotiate a lower balance on your outstanding debt. This can be a great way to get out of debt without having to take out a loan.

When Should You Get a Cash Advance?

There are a few situations where a cash advance can be a good option. These include:

  • If you’re in a financial emergency and need access to cash fast
  • If you have bad credit and can’t get a traditional loan
  • If you need to make a purchase but don’t have the cash on hand

How Can CreditAssociates Help?

If you’re looking for an alternative to a cash advance, CreditAssociates can help. We offer debt settlement services that can reduce your debt by up to half or more. This can be a great way to get out of debt without having to take out a loan. Contact us today at 1-800-983-6693 to learn more about our services and how we can help you get out of debt.

Common Questions About Cash Advances:

How long does a cash advance stay on your record?

A cash advance will typically stay on your credit file for seven years. This is because cash advances are typically reported to the credit bureaus as high-interest debt. This can lead to your credit score taking a hit if you’re not able to keep up with your payments.

How do you pay off a cash advance?

There are a few different ways to pay off a cash advance. You can use cash, a personal check, or a credit card. You can also set up automatic payments so that you don’t have to worry about making your payment on time each month.

What is the interest on a cash advance?

The interest rate on a cash advance is typically higher than the interest rate on a traditional loan. This is because cash advances are considered to be high-risk loans. The average APR for a cash advance is around 25%.

Do you have to pay back a cash advance?

Yes, you typically have to pay back a cash advance within a few weeks or months. This is because cash advances are typically short-term loans. If you don’t repay the loan, you may be charged additional fees.