Oftentimes people turn to a cash advance through their credit card if they find themselves in need of a little extra money in order to get them through a tough financial time. While this option is used quite often, the fact is that there is a better option that you may wish to consider. This option is taking out a personal loan. Continue reading below to find out more about the top three reasons why choosing to use this option is far more beneficial than taking out a cash advance.
#1: Personal Loans Offer Better Interest Rates
Most credit cards impose a rather high interest rate on any purchases that you make. This interest rate is even higher when choosing to take out a cash advance. What this means for you is that you are going to pay back far more money than what you actually borrowed. This can make repaying your debt far more difficult and time-consuming. While there are still interest charges associated with taking out a personal loan, the interest rates charged on this type of loan are often much lower when compared to that of a cash advance. This means that you can borrow the money you need for less.
#2: Personal Loans Will Diversify Your Credit Portfolio
If you are looking to improve your credit score over the long term, taking out a personal loan can actually help you to accomplish this goal. This is because creditors not only look at how much credit you have and whether or not you have repaid your debts, but they also look at what type of credit you have had. A credit report that shows both credit card accounts and installment loans helps to demonstrate that you have been responsible when using a range of financial products. This can result in an increase to your credit score. This increase will be more dramatic as you continue to pay off your personal loan.
#3: Personal Loans Offer More Favorable Repayment Terms
Credit card cash advances typically offer you a very short amount of time in which to repay the loan without suffering serious interest charges or other penalties. With a personal loan, you will be able to pay your debt back over a longer period of time without much smaller monthly payments than you may be required to make when using a cash advance. These more favorable repayment terms may also make it possible for you to borrow larger amounts of money without putting too much stress on your current financial situation.