The Pitfalls of Using Several Credit Cards
Credit cards get easily approved these days. Perhaps that’s why we see so many people owning multiple credit cards, and they seem to be flogging them around everywhere they go. Maybe they are just trying to flaunt their wealth. That’s alright, as long as they understand the pitfalls of using several credit cards.
Let’s just take a look at a single credit card and examine how it works. A person with a credit card can go around buying items on credit up to a certain credit amount approved by the bank. The credit amount depends on factors such as level of income and credit ratings. The higher the amount, the more an individual can buy without having to pay in cash.
After about a month or so, the bill is sent to the individual. The individual then has the option to pay off the entire amount in full, after which no interest will be charged. Or the individual can opt to pay just the minimum fee, and continues to owe the bank a balance. In this case, the bank charges a rather high interest on the balance amount that is unpaid.
This is where the pitfalls become apparent. You see, with just a single credit card, a person can go into debt. Often, the individual does intend to pay off the full amount when the next pay check arrives. However, this requires discipline, which is what most people are lacking in. As a result, the next paycheck comes and goes, and the debt remains unpaid. The amount owed, plus interest, continue to snowball. At this point, if no drastic action is taken, the individual finds no hope in repaying the debt.
So while it seems fine to be applying for multiple credit cards, it really isn’t. That’s because with multiple credit cards, the individual now owes several banks. A $5000 credit limit for a single credit card can now be $5000 x 4 (the number of credit cards), which is a $20k credit limit. $20k looks like a fair sum of money to spend, and one would expect the full sum to be spent gradually.
However, when it comes to credit cards, it is all too easy to blow $20k on entertainment, furniture, electronics, club memberships, and other big ticket items. It’s easy to spend that amount because we don’t see real cash being taken out of our pockets. It takes only a swipe of the card, and a signature, and the money is gone. And that happens more frequently than what most people think.
Furthermore, with multiple credit cards, the spending doesn’t stop when the credit limit for one credit card is reached. There is the second card, the third card, and so on and so forth. That way, the total amount owing to banks is actually infinite!
The only thing left to do when that happens, is to seek professional help from debt management companies. Otherwise, it’s all too easy to give in to seemingly insurmountable odds. Multiple credit cards equates multiple loans, and the combined impact of multiple loans can be stunning.
Gen Wright
http://www.articlesbase.com/credit-articles/the-pitfalls-of-using-several-credit-cards-692112.html
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Question about Cash Advance from Credit Card?
I recently received a job offer in another state and I need some up front cash to pay for a deposit and first months rent for a place since I am right out of school. I tried to obtain a small personal loan from several banks but they would not let me get one even though i have an excellent credit rating and my family can not help me out and the company can not provide relocation assistance.
My question is what is the process for getting a cash advance from a bank (not an ATM). I don’t have a PIN number so I can’t use the ATM so I need to go into the bank plus I have a larger cash advance line if I do it in the bank. Do i just go into the branch and tell the teller that I need an advance off my credit card?
I know the pitfalls of cash advances but it is my only way of getting money for a place. I have already went through a budget and I can have the credit card bill paid off within two months at the latest.
dont do it
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We had to do that to pay for some moving expenses. We went into the bank and asked for an accounts specialist.
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you should maybe go to a bank and see if you can get a loan. it is a lot easier to pay back.
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Don’t listen to jackoffs saying don’t do it……it’s not a good idea, but you are doing it to start a better life so go for it!
You need to contact the credit card company and get the pin and then you can go into the bank and get the money.
You can not get money without a pin
P.S. it’s easier to pay off a credit card then a loan. Don’t listen to that woman
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I’m have a masters in accounting
Just go into the bank, and make sure that you have all of your other pertinent ID, information available, Drivers license, state ID, SSC card, work ID, credit card statement if you have one, this should be enough. But, what you should do is call the bank and ask them what you need for this type of transaction. This way you will know for sure.
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Just call your bank and ask them to change your personal pin (they might just forward you to some automated # to do this). Be prepared to give your account info and other personal info to verify who you are.
Another ‘good’ option might be to request credit card checks from your bank. See if they offer some kind of year promotional rate on the checks so you can easily pay off the account in ‘x’ amount of months/year.
What I would NOT do is visit one of thoes payday loan centers you see advertised on the television.
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I agree with the lady who says ":Don’t do it", and I don’t have a masters degree in accounting. But I can read!
Credit card cash advances can provide consumers with convenient and instant access to "cold cash" in times of financial need, but cash advances should be avoided if at all possible. Informed consumers realize that cash advances are typically accompanied by fees and exorbitant interest rates (there is also no grace period for cash advances). Moreover, cash advances can be a major stumbling block for consumers seeking debt relief. We hope the following tips help consumers avoid the pitfalls associated with cash advances.
* Fees for cash advances vary, but fees can be very costly. Fees are computed using two calculation methods. Many card issuers calculate fees on a percentage basis, which typically ranges from 1% to 4%. Other issuers charge "flat fees" for advances. "Flat fees" are not based on the amount of the advance and, therefore, are always the same.
An increasing trend is to combine both calculation methods. Combining calculation methods results in higher cash advance fees. An example of this would be an issuer that charges x% for an advance, but charges a minimum of $10 regardless of the amount of the advance. Another example would be an issuer that charges x% for an advance or $20, whichever is greater. Read the terms of your card agreement carefully. Fee calculation can get tricky.
A few issuers do not charge any fees at all. This is very rare, though.
Finally, if you must get an advance, avoid using ATM machines. ATMs charge an additional fee for advances. This fee is charged by the financial institution that owns the ATM.
* Often the greatest potential pitfall for consumers who decide to get a cash advance involves finance or interest charges. The interest rate for cash advances is often several points higher than the normal purchase interest rate (the rate that is associated with everyday card purchases). Cash advance rates normally range from 20% to 25%. In contrast, the average purchase rate for a standard credit card ranges from 15.88% to 17.30% according to. However, a few issuers charge the same rate for both purchases and cash advances "Low Rate Report" for more info).
Other finance charge pitfalls involve grace periods and the payment method that a card issuer utilizes. Cash advances begin accruing interest immediately and, therefore, are not subject to a grace period. Thus, even if you pay your card balance in full when your bill arrives, you will still be accessed a finance charge for any advances.
A similar pitfall involves the manner in which payments are applied to your account. Most issuers apply payments to card purchases before they apply payments to cash advances (i.e. payments are first applied to purchases). If you carry a balance on your card, this can result in your a dramatic increase in your finance charges and overall interest rate.
* Please be aware that any "credit card checks" that you receive in the mail are usually treated as cash advances! Card issuers often tout such checks as an easy way to pay off the bill of your choice or to acquire some extra spending money. While using a check may be convenient, it can be extremely costly. Many balance transfers are also treated as cash advances.
*Cash advances are so tempting that some cardholders fall victim to the "cash advance trap" and find themselves caught in a vicious cycle.
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i have credit cards, and i recently took out a cash advance on mine…first, you need to see how much is available for cash before going to the bank…that will save you the embarrassment. you can go online to see what your available cash amount is then go to the bank…in kentucky, all i need to show is my drivers liscense. its take bout 5-10 minutes for the bank teller to get the info sent through, but its better to go inside the bank than to use an atm because the atm may charge you a fee.
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