How to Avoid a High Interest Rate Cash Advance Credit Card
When shopping for a credit card, borrowers tend to look at the initial monthly rate of the debt and not read the fine print about the APR (annual percentage rate) or the interest rate associated with cash advances. By thoroughly reading the disclosures prior to application, a borrower can find the cheapest card and therefore the lowest interest rate on a cash advance.
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Instructions
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Research your credit card options. Ask for a Truth in Lending Statement on the credit card to be emailed or mailed to you prior to applying for a new credit card debt.
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Read the Truth in Lending Statement for each credit card option. Note the initial interest rate and the rate that it will shift to after the introductory period is over. Note the fees for late payments or over the limit charges. Also, notice the balance transfer rate and the cash advance rate.
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Make a chart listing each credit card and each rate and fee associated with it. Also, note the APR (annual percentage rate) on each card. The APR is the numerical representation of the total cost of the debt for a full year, including the monthly interest rate and the associated fees on the debt. The credit card with the lowest APR is the cheapest overall debt.
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Tips & Warnings
Credit card companies offer the best and lowest interest rates and fees to borrowers with high credit scores and low balances on their other credit cards. To ensure the best possible rate offers, pull your credit report from a free site, such as AnnualCreditReport.com. Report any errors on your report to the site immediately and pay down the balance on your other credit cards to less than 30 percent of the limit. This will help to quickly raise your score and give you the lowest possible options for credit card cash advance rates.
Cash advances are almost always the highest interest rate loans from a credit card. Many financial advisers warn borrowers against this type of debt and suggest trying to find any other alternative than using this option. Be sure that cash advances are your only option prior to using it.
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