Cash Advance on a Fixed Income

There are often times when a cash advance injection is necessary to meet expenses. Cash can be obtained either as a credit card cash advance or a cash advance payday loan. In either case it involves borrowing against future income yet those on fixed incomes regularly avail themselves of the service. Payday loans are indeed offered to those on fixed incomes such as social security, pensions, and disability benefits, in addition to those in regular employment.

Having a fixed income in no way means that finances are not subject to solid budgetary practices. However those who rely on the next pay day or benefit check may be sailing close to the wind by borrowing against their next regular payment.

Obtaining credit card cash advances is one of the most foolish monetary practices to follow. Many obtain them without considering or understanding the full costs involved. Many are unaware that cash advances are charged at a much higher interest rate than regular credit card transactions and simply pay the bill as it falls due, or allow it to carry over as a balance.

For many a credit card cash advance simply represents a convenient method of drawing cash, even when there was no need to actually borrow. Those who routinely do so will find that by giving up the habit their fixed income will stretch further each month.

From the moment a credit card advance is taken interest is levied. There is no grace period offered. Additionally cardholders are charged a typical fee of three percent of the amount advanced, which added to the interest charges can make such a transaction very expensive.

A typical credit card cash advance of $500 would cost an average $26.25, and if the balance is not paid off in full the outstanding amount will then continue to attract compound interest. Those on a fixed income that does not contain enough surplus cash to cover the cash advance in one payment, can find that the advance soon turns into debt.

Cash advances from payday loan lenders are often the choice of those on a lower fixed income, or those with no or poor credit scores. The lender assesses future income as the basis of repayment, rather than searching an individual’s credit history. A checking account and a regular income are the common requirements which lenders demand.

Those on fixed incomes who borrow more than they can reasonably afford to pay back from their next pay check or benefit check are more likely to use the services of a payday loan lender more frequently, sometimes taking another cash advance to help pay the last one.

Whilst occasional borrowing may be necessitated by a financial emergency it is far more prudent to anticipate a time when a cash advance may be needed and budget and save accordingly. Cash advances are an expensive choice which depletes future income.