Withdrawing cash on credit cards should be last resort

Taking out cash on your credit card to tide you over until payday can do you more harm than good.

12:59 05 May 2013

A lot of people sometimes find themselves penniless weeks or days before the next payday. Most of these people automatically turn to their credit cards for solution. If you’re one of them, let me tell you that this isn’t exactly practical.

Taking out money from your credit card usually comes with high interest rate. Usually, the interest is computed the same day you took out the money. This means that the longer you don’t pay your debt, the higher interest you’re going to incur.

This is the reason why this option should be your last resort. Should you find yourself in need of money a couple of days before your next salary, consider these options first:

• Request temporary extension of your overdraft limit from your bank if possible.
• Buy only what you need till the next payday.
• Ask family members or friends for a loan.

If however, withdrawing money from your credit card isn’t something that you can avoid, ensure that you have the lowest interest rate credit card so you can at least save money.