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During high school and college, most of us receive lessons on how to manage their debt. The situation will be different if a student is pursuing a degree in finance, math, business, accounting, or economics; they are less likely to have any exposure to handling debt, aside from a little introduction to student loans at the start of one's college experience. While those in the above-mentioned fields of study may be aware about credit debt and credit Cash Advances, the rest of the student batch may need a little more schooling in the subject. There are several types of Cash Advances: some are dependent upon income, and thus mimic payday loans, some are upon collateral i.e., against some security and then there are credit card advances. Since credit is the most preferred choice among college students, it is vital to understand how credit Cash Advances work. A credit card cash advance is, as the name indicates, an advance of cash from one's line of credit: the card user can simply visit an ATM and withdraw cash from his/her credit card similar like debit card. Most credit cards allow these types of advances, at an interest. Unlike a debit withdraw, which is taken from available funds in one's bank account without the accrual of interest, a credit advance is extended from one's available credit but with an extremely high interest rate. Because of the high interest rates associated with these advances, paying off the debt acquired from the advance turns out to be a little difficult. College students who rely on credit cards can generate huge benefits by understanding when and how these advances can (or should) be used. Listed below is the list of factors to be considered before opting for credit card Cash Advances. - Keep a check on your credit limit, balance, interest rates, and fees before considering any advance from the card. Also, one should be well aware of the limits on the amount of cash that an individual can withdraw.
- Don't use these advances on instant purchases. What falls under instant purchase may differ from person to person, but it is fair to say that most would agree that a night on the town partying with friends is not a valid reason to withdraw cash from a credit card. Really one should ask himself / she, is this purchase worth the huge interest? Whenever in doubt, leave it out.
- Limit withdraws to the amount that you can pay back the next month. Banks apply payment to low interest, multiple purchases before applying payment to high interest advances. Hence, one should avoid withdraw more on a card.
By following th abovee simple rules, college students can protect themselves against excessive cash advance debt. Author Bio: The writer is an expert in the field of industrial service providers with focus on Business Cash Advances and Credit Card Convenience Fees .
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