Credit cards are often used for convenience in daily transactions. But when people use credit cards to withdraw cash or use credit card cashing services the situation becomes financially risky. While these methods provide instant cash, they also come with high costs and serious implications. Let us look into why this form of borrowing is considered expensive and how it affects your finances.
Why Is Credit Card Cashing Considered a High-Interest Borrowing Option?
Credit card cashing refers to withdrawing money from your credit card instead of using it for regular purchases. This can be done through ATMs or through third-party services that convert your card balance into cash. In Korea, Credit Card Cashing (신용카드현금화) is often used by people who need immediate cash without going through a bank loan.
Although it appears to be a quick way to get money, this method is treated as a loan by credit card companies. Therefore, the borrowed amount attracts a higher interest rate than regular purchases.
Why Is the Interest So High?
When you use your card for cashing, the credit card company sees it as a higher-risk transaction. The reason is simple: cash withdrawals do not have any collateral, and users who rely on cash advances are often in urgent need of money.
Because of this, the interest rate for credit card cashing is usually between 15% and 25%, which is much higher than standard purchase rates. Some providers also add additional fees such as transaction charges or processing costs. As a result, the total amount you repay can become significantly larger than what you originally withdrew.
Immediate Interest and No Grace Period
A major difference between cash withdrawals and card purchases is the grace period. Regular purchases often have an interest-free period before payment is due. But with credit card cashing, interest starts accumulating from the very day you withdraw the money.
For example, if you withdraw $400 using your card, the interest begins immediately. Even if you repay within a week, you still have to pay the daily interest charge. Therefore, this form of borrowing is considered high-cost, even for short durations.
Why People Still Use It
Despite its high cost, some people still use 카드깡 because of the instant access to money. For individuals who do not qualify for loans or need urgent funds, this may seem like the easiest option. However, the short-term relief often leads to long-term financial strain.
Once the repayment period arrives, the borrower faces high interest and repayment pressure. This can lead to a cycle of repeated borrowing, which further increases debt.
Conclusion
Credit card cashing may appear to be a quick fix during emergencies, but it comes with high interest and serious risks. Whether through direct cash advances or credit card cashing services, the cost of borrowing is steep and often traps users in debt. By understanding the financial impact and avoiding unauthorized services, you can protect your credit score and maintain financial stability.
