Cash advances or late invoices? What is worse?
There is nothing like this in your stomach when you find that something serious is going to happen. We all remember that at school we found that we had an exam that we forgot to study for. But in the real world, this cold knot of fear usually has additional ramifications. For example: what do you do if you have an upcoming bill for which you don’t have the funds? The consequences of paying a late invoice (or non-payment) can be very serious for your creditworthiness.
On the other hand, many of your options for getting that money quickly for your payment can put you at an extremely high-interest rate and plunge you into a cycle of predatory debt.
I hope you have friends or family who can help you in such situations. However, if you do not have this option, you will have to make difficult decisions. Is it worth getting a risky advance if you have to pay your bill on time?
There are two types of cash advances.
If you are late for an invoice, an advance loan seems to be a good way to resolve the situation. But is it?
A real advance is purchased on your bank card. (Why are we talking about “real” prepayment loans? More information below.) When you withdraw a credit card advance, the amount you withdraw is added to your credit balance as a normal purchase.
However, there are important differences between credit card advances and regular credit card transactions.
For one, cash advances have higher interest rates than regular purchases on your card. While standard transactions give you a one-month grace period before interest accrues, cash advances immediately add up. Cash advances are often associated with other fees.
Now for these not-so-real prepayment loans: Many payday lenders and other predatory companies use the term “prepayment” to refer to the loans they offer without a credit check. This is not a good thing because payday loans (and other types of bad credit) are much more dangerous than standard cash advances. They come with extremely short payment terms and annual percentages of up to almost 400% per year, or even more! If you pay a bill too late, it can affect your balance and your quality of life.
Payment history is the most important factor in your credit standing. It represents 35% of its total, more than any other category. (Your total amount is in second place with 30%). Lenders, homeowners, and utilities really want you to pay your bills on time before they are reviewed, rented, or serviced. So if a late or unpaid invoice ends up in your credit report, it can have an extremely negative impact on your score. This could be the most damaging thing you can do for your credit rating. And then there are the other effects of paying a late invoice. In other words, you can delete important services or restore important goods. If you are late on your electricity or gas bill, this may result in the deactivation of the service by your operator. Without heat or electricity? No thanks!And how about falling behind on your car loan payments and getting your car back? Could you go to work or your children at school? These are consequences that can really get out of hand.
In the end, it’s really a question of diplomas. If you’re just a little late on an invoice and can get away with late fees and no overrides in your credit report, this is probably the best option. However, if you are behind on your bill, it is best to request a prepayment loan, especially if it is a prepayment loan on your credit card. It’s just not something you want to do too often; You don’t want these high-interest debts to accumulate. But as a single solution, it’s the best of your bad options. On the other hand, you can probably avoid such situations entirely by taking the right precautions in cash advance.