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Understanding Cash Advances and Alternatives

At O1ne Mortgage, we prioritize consumer credit and finance education. This article aims to provide you with an objective view to help you make the best financial decisions. For any mortgage service needs, feel free to call us at 213-732-3074.

Can You Turn Off Cash Advances on a Credit Card?

Cash advances allow you to withdraw cash against your credit limit at a bank, credit union, or ATM. While they can be useful in emergencies, they often come with high interest rates and fees. If you’re concerned about the potential debt from cash advances, you might want to disable this feature on your credit card. Contact your card issuer to explore your options, which may include disabling cash advances entirely or setting a low maximum cash advance amount.

Why You Should Avoid Cash Advances

While cash advances can provide quick access to funds, they come with several drawbacks:

• High APR: Cash advances typically have higher interest rates than regular purchases.
• No Grace Period: Interest starts accruing immediately on cash advances.
• Cash Advance Fee: Fees can range from 3% to 5% of the amount borrowed.
• ATM or Bank Fees: Additional fees may apply from the financial institution or ATM owner.

For example, a $1,000 cash advance at 25% APR with a minimum monthly payment of $31 would take 55 months to repay, costing you an additional $729 in interest and fees.

Alternatives to Costly Cash Advances

Instead of opting for a cash advance, consider these alternatives:

• Emergency Fund: Use your savings to cover unexpected expenses.
• Friends and Family: Borrowing from loved ones can be more cost-effective, but ensure you agree on repayment terms.
• Due Date Extension: Ask your service provider if you can extend your bill’s due date.
• Personal Loan: Personal loans often have lower interest rates than cash advances.
• 0% Introductory APR Credit Cards: If you have good credit, you might qualify for a card with a 0% introductory APR, allowing you to make interest-free purchases for a set period.

How Cash Advances Affect Your Credit

While cash advances don’t directly impact your credit score, they can increase your credit card debt, affecting your credit utilization ratio. This ratio is a key factor in your credit score. To strengthen your credit, consider accessing your credit report and taking steps to improve your credit score.

For more personalized mortgage services, contact O1ne Mortgage at 213-732-3074. We’re here to help you make informed financial decisions.

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