If you have an unexpected expense, you're probably researching ways to come up with some money. Some people are torn between using personal loans vs. a credit card cash advance. Even if you have bad credit, you can still qualify for a personal loan, which is also known as an installment loan. Here are three reasons an installment loan is a better choice than a credit card cash advance.
There are several benefits of installment loans that make them the best choice for quick cash.
Here are three reasons an installment loan is a better choice than a cash advance.
The payment amount of a credit card cash advance loan may fluctuate. Not only can interest rates on credit cards change, you could be charged a transactional fee for the cash advance, and your minimum payment may change each month. When you use installment loans, you will know what your payment is going to be for the life of your loan. You will be given loan terms at the outset of your loan which will specify how much your payments are and how long they will last.
Personal loans instead of cash advances give you simpler and more predictable payments.
Another benefit of installment loans is that the loan repayment has a specific ending date. An installment loan is for a particular period of time. When you are given the loan, you're told exactly what date your loan payments will end with a full payoff. This isn't the case with a credit card cash advance. When you use revolving credit, you carry a balance forward each month, and additional interest is added to your balance. Unless you pay off your balance in full, your payments could go on almost indefinitely. Moreover, some credit cards begin charging interest on cash advances from the disbursement date of the cash advance.
If you have poor credit, you may only be able to take a cash advance on a secured credit card. This means that your credit limit is equal to cash that you have on deposit with the credit card issuer. While this can help improve your credit score over time, it won't help you meet your cash emergency because your borrowing power is limited. An installment loan, however, could allow you to borrow the amount you need.
Finding a source of funds when you have an emergency can be a challenge. Cash advances might be tempting, but the benefits of installment loans may make this loan option a better choice.