Cash Advance Can Lead to a Bigger Cash Flow Problem

The problem with taking out a cash advance on your credit card from an ATM machine is not just about having to pay extra charges and a heavy rate of interest. When you are faced with the option of taking out a cash advance on your credit card you need to think clearly and hard about how to deal with a bigger problem which might be the problem of cash flow. People who take out cash advances are more likely to default on their credit cards than people who don’t. Taking out a cash advance is considered as a sign of financial difficulty. Therefore a cash advance is chargeable by a higher rate of interest. It is commonly understood that a person will only take out a cash advance at the higher rate of interest when he has a problem with substantiating the need for expense with his income. If a person is having problems paying his bills using his income then it is likely that he is going to have a problem paying off credit card bill.

Taking out a cash advance is a temporary solution. You cannot rely forever on cash advances to pay off your bill and your financial obligations. Taking out a cash advance and having to pay high interest fee subsequently may result in you being unable to make payments on your other credit card, loans or bills.