5 Benefits of Converting Credit Cards to Interest Free Cash
16 Nov, 2017 / Comments: Comments Off on 5 Benefits of Converting Credit Cards to Interest Free Cash / By William Mahnic
As a business owner, your credit card is important. It helps you to pay for the things that you need to keep your business running. There are times, though, that a credit card won’t cut it; you need cash instead. You could apply for a loan through the bank or online or use a peer to peer lending site. If your credit isn’t stellar, these options could mean denial or a very high interest rate. Did you know that you could turn your credit card into cash? Or that it could be turned into interest free cash?
Most credit cards come with an option to do a cash advance. This provides you with instant access to cash and the amount you withdrew shows up as a balance on your credit card. A major problem with cash advances is that they come with high interest rates. It is possible, however, to turn your credit card into cash interest free.
There are a couple of ways to go about this. The first way is to use a convenience (or access) check that comes with your monthly statement or offer. The check, which is your cash advance, is then deposited right into your bank account. Another way to convert credit cards to interest free cash is to take advantage of an interest free balance transfer. You first do a cash advance on a credit card that has no cash advance fees. Then you transfer the balance of that credit card onto a card that has an interest free balance transfer. Your first credit card (which might have a high cash advance interest rate) is then back to a zero balance and the payments on your other credit card are interest free. Here are 5 benefits of converting credit cards to interest free cash.
1. Provides an Alternative to Loans
One of the most common ways to get cash is to apply to the bank for a loan. This option may work for some, but not for others. If you have less than great credit, you may be denied. If your loan is approved, it is for a very high interest rate. There are numerous alternatives to traditional bank loans, including online lenders and peer to peer lenders, but your interest rates may be just as high for these options as well. Even if you can afford the monthly payments, the interest charges can eat away at valuable profits. Converting your credit card into interest free cash provides an alternative to lending options. Making your payments on time (and paying off the cash advance entirely) is also a helpful tool to build your credit.
2. You Get the Money Fast
With most loans, you don’t get the money you need right away. You first need to go through the application process then you need to wait for an approval. Finally, you may have to wait a few business days before the check is cut or the funds are deposited into your account. Even if you apply online (where approval or denial is almost instant), you may still have a waiting period before the funds are available. This can be a serious issue if you need the money right away. The cash you get by converting your credit cards is available for use right away.
3. You Have Revolving Credit
When you take out a loan, you pay it off and it’s done. If you need cash again, you have to go through the application process all over again to take out another one. This is not the case when you convert your credit cards to cash. When you pay off the balance (or even make a dent in it), the funds are available for withdrawal again, as many times as you need.
4. The Money is Unsecured
Loans are available as secured or unsecured. Secured loans are those that have some type of collateral attached to them. If you fail to make your payments, the bank can take possession of the item, whether it’s equipment, inventory or even your business building. Unsecured loans have no collateral. If your interest rates are going to be high, offering collateral can sometimes reduce them. The interest free cash you get from your credit card is also unsecured. Having no collateral attached to the money can help to protect your business. It is still essential that you make your payments every month and that you make them on time.
5. Your Payments Go to the Principal
When you make a payment on a loan (or even on a regular credit card), some of the money goes to the interest while the remainder goes to the balance. It can take you a long time to pay off the balance, especially if you are only making the minimum payments. Zero percent interest means that the entirety of your monthly payments goes directly to the principal balance. This thus enables you to pay down your balance much faster.
Getting cash from your credit cards without having to pay high interest rates can be a very enticing option when you are in need of cash for your business. It is important to keep in mind that the interest free periods only last for so long. Make sure that you pay attention to the length of the interest free period and pay the balance off before it ends.