SBI Student Plus Advantage Card: Why Cash Advance Should be Avoided?
Cash advances, including those offered by the SBI Student Plus Advantage Credit Card, are generally discouraged for several reasons. While they may seem convenient in certain situations, the drawbacks and costs associated with cash advances can have a detrimental impact on your financial well-being.
Why ATM cash advances should be avoided on SBI Student Plus Advantage Credit Card? –
(1) High Fees: Cash advances typically come with steep fees, either as a percentage of the amount withdrawn or a fixed fee, whichever is higher. These fees can quickly accumulate, making cash advances an expensive way to access funds.
(2) High Interest Rates: Cash advances often carry higher interest rates compared to regular purchases. Interest on cash advances starts accruing immediately, without the grace period typically offered for regular purchases. This means you’ll be paying interest from the day you make the withdrawal.
(3) No Grace Period: Unlike regular credit card purchases, cash advances do not have a grace period during which you can pay off your balance without incurring interest. This can result in accumulating interest charges over a short period, making it costly to repay the advance.
(4) Impact on Credit Score: Cash advances can have a negative impact on your credit score. The high utilization of your credit limit and the potential for increased debt can lower your credit score, affecting your creditworthiness in the eyes of lenders.
(5) Priority Repayment: When making credit card payments, the money is typically applied to balances with the lowest interest rates first. If you have both cash advance debt and regular purchase debt, your payments may go towards the regular purchases first, leaving the higher-interest cash advance balance to continue accruing interest.
(6) Debt Cycle Risk: Depending on cash advances can lead to a cycle of debt if you are unable to repay the advance quickly. The high interest rates and fees can make it challenging to pay off the balance, potentially resulting in ongoing debt accumulation.
Alternate Options to Cash Advance
Before considering a cash advance, explore alternative options such as using a debit card, accessing funds from a savings account, or seeking assistance from family or friends. These alternatives are often more cost-effective and do not come with high fees and interest rates. Cash advances should only be used in genuine emergencies as a last resort. It is advisable to have an emergency fund in place to cover unexpected expenses instead of relying on costly credit card cash advances.
In conclusion, cash advances on SBI Student Plus Advantage credit card, should be avoided whenever possible due to their high costs and potential negative impact on your finances and credit score. Instead, focus on responsible budgeting, building an emergency fund, and exploring more cost-effective ways to access funds in times of need. If you are facing financial difficulties, seek financial guidance and explore alternative solutions before considering a cash advance.
Hi, I am Nikesh Mehta, owner and writer of this site. I’m an analytics professional and also love writing on finance and related industry. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business. I can be reached at [email protected].