An emergency situation for which you need cash is staring you in the face and your savings account balance is too low to deal with it.
However, you do have enough room on a credit card to cover it. Should you take a cash advance?
Interest rates on cash advances can be 24 percent or higher vs. 14 on a purchase. What’s more, if you get that advance at an ATM, you’ll be looking at an additional fee of approximately $5. These factors could make your financial problem even worse.
Consider these eight credit card cash advance alternatives instead.
A Personal Loan from Your Bank
If your credit history is solid and you have sufficient income, you’ll find your bank or credit union willing to extend you a loan with much better terms than those of a credit card cash advance. These loans can be repaid sooner as well, which results in even more savings than using your card to get the money.
A Consolidation Loan
Another method along these same lines is a consolidation loan from a company like Consolidation Plus. This will let you combine most of your existing obligations into one bill, lowering your total monthly payments each month, while solving your issue at the same time.
Borrow Against Your Salary
Bosses are people too. Explain the nature of the situation to them and ask for an advance on your pay. Many employers actually loan money to employees, at a low rate of interest, so don’t be offended if your request is met with a counter proposal. The important thing is solving your problem at as low of a cost as possible.
Borrow from Family or Friends
Think through how you will repay them and on what schedule, then approach them with a proposal in writing. Insist upon paying interest for the loan. Treat it like a business transaction, even though you are close with these people. Or, more accurately, because you are close with these people. Otherwise, you run the risk of ruining your relationship.
Credit Counseling/ Debt Relief
Depending upon the severity of your situation, you might also consider contracting a firm, such as Freedom Debt Relief, to evaluate your position. Problems like this can sometimes be symptomatic of more significant financial maladies. Credit counseling or debt relief might well be a better long-term solution.
Charge It Instead
An entire industry has emerged around helping people in your situation charge things formerly requiring cash. Credit card processors will let you pay your rent, the IRS, property taxes and almost anything else with a card as a regular charge.
Transfer Credit to Friends
Let’s say you need $1000 in cash to deal with an issue and you have friends about to make cash purchases. Ask them to let you pay for those transactions with your card and give the cash they would have spent in exchange.
There is a pitfall to avoid here though. If they subsequently decide they don’t want the item they bought, you’ll have to repay them in cash. In some cases, you’ll also have to be present when they make the purchases—although not always.
Sell Unused Items
Most of us have a treasure trove of items in our homes, sitting largely unused, that can be converted into cash. Doing this is easier than ever with Craigslist and eBay. They are also considerably more lucrative than garage sales. Even better, selling on eBay will usually get you paid in cash in one week’s time.
All eight of these credit card cash advance alternatives have their pros and cons. However, they are well worth considering before signing for a loan at 24 percent interest.