Don't Be Talked Into Taking Out Cash on Your Credit Card

We all know that over recent months it has become more and more difficult to get any sort of finance, and with so many households feeling the pinch due to increased costs it seems that there could not be a worse time for credit conditions to become as tight as they have. However, since the onset of the global credit crunch lenders have really reined in on their lending, and have made it increasingly difficult for consumers to get finance such as loans and mortgages.

Many households are suffering at the moment due to increased borrowing costs, increases in bills such as energy bills, council tax, and water, and higher living costs including petrol and food, the prices of which have really soared. Because of this many people are finding that they have little or no disposable income each month. According to credit card guides this is something that a number of credit card firms have been playing on, with some trying to entice consumers to get their hands on 'instant cash' by taking money out on their cards.

What's more in order to plant the idea into customers' heads and to make the process easier some credit cards firms have been sending out mailings to customers outlining the benefits of being able to get instant cash to spend on anything - and have even raised the withdrawal limits so that consumers are able to get their hands on more money. Of course, the one thing that these firms don't make a big deal about is the fact that taking out this money is going to cost you a pretty penny.

No matter how tempting it may feel to grab your card, head to the nearest cash machine, and withdraw a wad of cash to blow on an array of luxuries you need to bear in mind that this is something that is really going to cost you. With most credit cards you will be charged a hefty cash advance fee, so even if you repay your balance in full each month you will still be hit by these fees. If you do not repay your balance in full then you will also have to pay costly interest charge on your withdrawal, making it even more expensive.

At the end of the day there is little point in withdrawing cash from the machine with your credit card when you can just as easily use your card to make any necessary purchases, thus avoiding the cash advance fees that will otherwise be applied. So, if you find yourself being encouraged to take out cash from the machine by your credit card company make sure that you think twice and consider whether you really need to take out cash, as otherwise you could find yourself wasting a small fortune on expensive fees and charges.

You should compare credit cards to make sure you have the best card for your needs, either by comparing low interest rate credit cards for purchases or if you really do need to withdraw cash on your card you should compare low cash advance rate credit cards to find the card offering the cheapest cash rates and fees.

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Using Your Credit Card to Manage Your Finances

Before I begin, only someone who is wise enough not to get into debt can use this method and if that person figures he is getting over their head, he should pay by cash, check or debit card. However, the wise money manager can use this method to manage his finances.

True, you may need cash and loans for big items. For instance, tollbooths and some dollar stores do not take credit cards, and neither does it look good to put your name and your credit card number in the collection plate at Church, but for most purchase, you can depend on your Master Card or Visa.

First, this will only work if your credit card carries no annual balance, has a cash-back, or points system. You must be able to pay your balance off every month and not even carry over one cent and think of your credit card as a debit card with a bonus. After so many points, you get a trip, an Mp3 player, new sheets, or whatever.

It also helps if you have a high interest savings account that you will transfer into your checking account and then after that, placing the amount you spent onto your credit card account. If you got one of those credit card insurance, it would be best to put the money on the statement before you use the card, and after a time, you will be able to estimate how much you will need.

Now many checking accounts do not carry interest unless they run into thousands of dollars, and many businesses prefer either credit or debit cards. With debit cards, the money comes out of your bank account almost instantly, whereas with credit cards, you get a little leeway.

Before you use this, you have to make sure you know what your spending habits are, because if you put almost everything on credit, and pay off each month, you cannot have surprises. So, the first thing you should do is to figure out what you cannot put on credit, the purchases you make at the Dollar Store, the odds and ends you pay cash for, and the surprises such as group wedding gifts, showers, et cetera, also anything that you cannot use your card. After this, figure out your annual payments or anything that costs considerably much. For these, you will have to deposit money into your high interest savings account and then when you have enough, you withdraw the money into your regular savings or checking account, charge the item, and then you are so many points to your goal.

After this, you make a list of what you spend each month, and then you are all set. You can now use your credit card as a debit card with no worry.

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