A Dallas area business owner, Renell (“Rae”) Shorter leads Styles by the Lash Diva in The Colony and offers customers fashion-forward makeup, eyelashes, and hairstyles. A mentor to entrepreneurs in her local community, Renell Shorter assists people in living productive, debt-free lives that maximize opportunities.
One of the key aspects of living without the burden of major debt is foregoing the ATM cash advances available through credit cards. The issue with cash advances begins with percentages, or fees, charged on the transaction itself. This is typically a flat fee such as $4, or 4 percent, whichever is higher. Beyond this advance fee, there is the ATM fee as well, unless the credit card is tied to the bank from which the money is withdrawn.
The next challenge is the significantly higher interest associated with the cash advance compared with the interest charged on purchases. With no grace period offered, the interest on cash advances begins to accrue immediately.
Additionally, the money owed on credit card purchases is automatically allocated for pay off before the cash advance principal is touched. If a card has $10,000 in total debt, with $4,000 associated with cash advances, $6,000 must be paid off before reaching a point of paying off the higher interest portion of the debt. Another problem with cash advances is that they are often necessary when people experience financial setbacks and need money fast. This is not the ideal time to add high-interest debt, and any strategy that avoids this should be carefully considered.
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