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Paying Mortgages with a Credit Card Cash Advance

Is a Credit Card Cheque a Clever Way to Make Mortgage Repayments?

Feb 25, 2009 Asa Ghaffar

A number of people are getting a credit card cash advance or using a credit card cheque to make mortgage repayments. Is paying mortgages with a cash advance a good idea?

Rising unemployment is meaning that increasing numbers of people are turning to high APR credit card cash advances to make ends meet. The British Chamber of Commerce estimates that UK unemployment will reach 3.1 million people (10% of the workforce) over the next 2 years.

What is a Credit Card Cash Advance?

A credit card cash advance is an opportunity for a consumer to borrow money against their permitted credit limit. A credit card cash advance doesn't simply extend to withdrawing money from a cash point machine, it can also be a credit card cheque or a gambling transaction. Consumers pay a high APR and various withdrawal charges for credit card cash advances.

How Many People are Paying Mortgages with a Credit Card Cash Advance?

Paying mortgages with a credit card cheque or credit card cash advance is growing in popularity. Internet comparison site uSwitch.com believes that 7.3 million people are currently using credit card cash advances with a cumulative value of £3.7 billion per year. Furthermore, 1 million people are using credit card cash advances and credit card cheques for the purpose of paying mortgages.

Is Making Mortgage Repayments with a Credit Card Cash Advance Cost-Effective?

A credit card cash advance or using a credit card cheque is a more costly form of borrowing than normal credit card debt. It is estimated by uSwitch.com that the average APR on credit card cash advances stands at 29.97%. CreditAction.org has calculated that the rate of APR is 17.42% on credit card debt. Credit card cash advances charge a premium of 12.5% plus miscellaneous charges.

Credit Card Cash Advances vs. Payday Loans

Those struggling with financial difficulties and a bad credit rating may find that a credit card cash advance is the cheapest emergency option for paying the mortgage. No credit-check Payday loans and logbook loans regularly charge a high APR of in excess of 1000%. Even pawnbroker loans, that require collateral, charge a high APR of 125%.

Whilst getting a credit card cash advance isn't a long term solution to financial difficulties and personal debt, it could help those with poor credit in the short term. Those with a good credit rating may be better served getting a personal overdraft extension or seeking financial assistance from a family member.

Those struggling with financial difficulties and personal debt may be interested in finding out whether they have an illegal credit card or unenforceable loan agreement. Individuals that are struggling with serious debt problems may be able to write-off debt with an Individual Voluntary Arrangement, also known as an IVA.

The copyright of the article Paying Mortgages with a Credit Card Cash Advance in Personal Budgeting/Finance is owned by Asa Ghaffar. Permission to republish Paying Mortgages with a Credit Card Cash Advance in print or online must be granted by the author in writing.