The Credit Card Advance explained and alternative ways of raising finance
A Credit Card Advance is just one of the many ways in which you can raise funds and like all forms of borrowing, the credit card cash advance has its benefits and pitfalls.
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Here we explain and define the Credit Card Advance, and take a look at the plus points of borrowing cash on Credit Card, as well as the drawbacks of a Credit Card Cash Advance. Finally, we also investigate other forms of raising money and how we can help!
Table of Contents:
What is a Credit Card Advance?
So, what is a Credit Card Advance then? Well a Credit Card Advance quite simply can be a quick and convenient, but expensive way of borrowing money and obtaining cash be it through a 'hole in the wall' cash machine, or by withdrawing in person from a bank teller at a participating bank branch for larger sums of money.
Like all forms of borrowing, there are advantages and disadvantages to the credit card cash advance which we take a look at in the next section below.
Advantages of a Credit Card Advance
Advantages of raising funds by way of a Credit Card Advance include:
- Speed: generally cash advances through a credit card are available immediately through a 'hole in the wall' ATM unit, or for larger amounts in person at a participating bank branch.
- Access: there are no application forms to complete, and you don't need to justify the purpose for which you require your funds.
- Flexibility: the terms are flexible, and monthly repayment is subject only to a minimum percentage of the credit card's outstanding balance, of usually 3%.
- Repayment: higher amounts can be repaid at any time, immediate interest relief is applied when payment is received.
- Preferential Rates: some credit card companies offer special rates for limited periods, for example 0% on balance transfers or purchases for six months.
Disadvantages of a Credit Card Advance
However, there are disadvantages of using credit card advances as a means of raising funds, and these include:
- Cost: credit cards can be very expensive, and typical rates can be as high as 20% APR or even more!
- Fees: to withdraw cash on a credit card, the provider will make a charge for cash withdrawals in the region of 3% of the amount of the credit card cash advance.
- Term of repayment: if you were only to repay the minimum amount required each month, with some card facilities, it could take up to ten years or more to repay.
- Maximum Loan: is often restrictive, and possibly only appropriate for smaller purchases.
In summary, credit card cash advances are an expensive way of borrowing money, and for many borrowers they have proven to be an all too convenient form of borrowing as a borrowers debts can easily spiral out of control quickly especially if they don't discipline themselves and use them sensibly! However, in terms of speed and flexibility, they can prove to be very useful, particularly in emergencies.
We would suggest that you tread with great caution when it comes to borrowing money on credit card and consider the alternatives.
Alternative ways of raising finance
So, what are the alternatives to Credit Card Cash Advances. Well, there are a number of options at which we take a look at in greater detail on our Raising Finance page, where we also look at the advantages and disadvantages of each individual method. But in summary, here are the other options that may be available to you.
- Further Advance
An additional loan from your current Mortgage Lender which is secured on your property. - Remortgage
A Remortgage is the process of paying off your existing mortgage lender with the proceeds of a new mortgage on your existing property. - Secured Loan
A loan for homeowners that is secured over their property. - Unsecured Loan
A type of loan that is not secured over your property, so you don't have to be a homeowner. - Borrowing from Family
Borrowing money from family members such as parents can be a great way of raising finance, particularly if you are a first time homebuyer and are looking for a helping hand to get on the property ladder.
How can Shire Direct assist me?
Why not get in contact with us to see how we may be able to help. Our professionally qualified advisors are available to discuss the options open to you, including credit card advances, homeowner secured loans, and mortgage facilities from 8am until 10pm everyday (including Saturdays & Sundays) on our Freephone line 08000 282 281. Alternatively, you can also enquire online at any time, and we'll be delighted to provide you with a rapid in-principle decision.
We will of course carefully assess your circumstances, needs, requirements and aspirations and come up with the most appropriate solution for you! You'll find our service to be friendly, professional and helpful. So please don't hesitate to get in touch if you would like to discuss your requirements, naturally without any obligation!
So that concludes our look at using Credit Cards for Cash Advances. Hopefully, we've managed to explain Credit Card Advances and answer any of the initial questions you may have had, as well as shed some light on some of the potentially more suitable alternatives. Remember, there is a wealth of information on the pages throughout our site, so why not take a few minutes out and explore some of the options that may be available to you!
Mortgages/Remortgages: The overall cost for comparison is 9.8% APR. The actual rate available will depend upon your circumstances. Ask for a personalised illustration. APR variable and based on a usual case. Most customers are likely to receive a lower rate or the same rate as our overall cost for comparison rate - learn more about APR.
There are no upfront broker fees.
However, a fee may be charged on successful completion. An indication is that on conforming cases (straightforward applications with no or minimal adverse credit) a fee may be charged of up to 1% of the amount advanced, typically £795 and will depend on your circumstances. For non-conforming cases (where case research and processing may be more complex due to adverse credit or unusual circumstances), a fee may be charged of up to 3% of the amount advanced, typically £1,995.
Homeowner Loans: Rates from 8.9% APR variable, but typically 13.9% APR variable. Most customers are likely to receive a lower rate or the same rate as our typical variable rate - learn more about APR. Shire Direct also has a range of non-conforming loan plans with rates up to 19.9% APR. These plans are designed to help those who may have a more difficult credit history, including CCJ's and credit arrears, IVA and bankruptcy problems.
A broker fee of between 0% and 10% of the loan advance may be charged for arranging a secured loan.
All loans subject to status and secured on property.
The actual rate available will depend upon your circumstances. Written quotations on request.
THINK CAREFULLY BEFORE
SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Adding existing debt to your mortgage will increase the repayment term and overall cost.
Are you worried and becoming stressed because you are having problems getting a mortgage or remortgage? Worry and stress no more! Here at Shire Direct we provide tailor made mortgage solutions to suit you, and can usually help with all kinds of circumstances including...
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Shire Direct and Shire Direct Mortgages are trading styles of Shire Processing Centre Limited which is
Authorised and regulated by the Financial Services Authority in respect of regulated mortgage products and general insurances.
Registered No: 302389. Commercial funding and Secured Loans are not regulated by the FSA.
Licensed Credit Brokers. Consumer Credit Licence Number: 349999.
Shire Processing Centre Limited is registered under the provisions of the Data Protection Act by the Information Commissioners Office: Registration No: Z6795249. Registered in England & Wales. Company number: 2732202. Telephone calls may be recorded for training, monitoring and security purposes. All applicants must be aged 18-years or over.