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In the world of
short-term loans, a cash advance and a payday loan
are the same thing; both of these terms refer to a
type of loan that is based off your next paycheck.
This class of loans allows you to get an advance on
your next paycheck without any real form of
collateral aside from your job, and has become an
increasingly popular form of financing for consumers
nationwide.
However, cash advance loans and a credit card cash
advances are not the same thing by any means. Just
as the name of the second product suggests, the
source of the funds comes directly from your credit
card - provided you have a credit card that will
allow you to take a cash advance out against your
existing line of credit. These cash advances often
have many stipulations that are buried deep within
your cardholder agreement, so it's important to
review the agreement to be sure that you understand
what you're getting into ahead of time.
Common stipulations include: * Activation of cash
advance feature (this can include a wait time for a
PIN) * Additional fees assessed to your account when
you take out your first cash advance * Additional
fees assessed to your account for each billing cycle
that your cash advance plus interest are not paid in
full * Increased interest rates for both cash
advances and purchases
Every bank is different, so before you consider
taking out a cash advance using your credit card it
would be wise to call your issuing bank and ask them
what the consequences would be if you chose to
finance your needs using a credit card cash advance.
Alternatively, it might be smarter (and safer) to
choose a cash advance loan issued by a company apart
from your credit card company so as not to suffer
any of the negative consequences.
Cash advance loans do not require a credit check,
nor do they post any report to the various credit
bureaus if you honor your loan agreement. This is
the definitive difference between a cash advance
loan and a credit card cash advance - with the loan
you receive no bureau reporting, with the credit
card you do. This is important because any inquiries
or updates to you credit report can cause the
interest rates on your credit cards, mortgage loans,
etc. to skyrocket. Again, this varies from company
to company, but in many cases this is written into
your contract so it's important to consult your
current lenders before you make the decision.
In the end, it's generally safer just to get a cash
advance loan from a company that specializes in cash
advances. Because there's no bureau reporting or
credit check, no one will ever know that you took
the loan out unless you tell them. The interest on
these loans is also comparable to or even lower than
the interest that you would pay on a credit card
cash advance, so it's easy to see why this sort of
loan is becoming a popular choice for consumers
today. |
