Saturday, October 18, 2014, AM | Leave Comment
When you need a large sum of cash quickly, then don’t pull out your high interest-rate credit card as your first option. There are other ways to get cash and a lot less expensive. There are some finance experts who would argue against and others would be in favor.
Do your Math yourself which method of getting cash is better for you. Talk to your financial adviser first.
The following are ways to consider as a reminder that they are available to you:
Family and friends
If you need to borrow less than $10,000, the money can be treated as a gift and will not be taxed. If you want the money to be treated as a loan from family or friends, you must work out a payback schedule. The interest attached with the loan might be insignificant. This would be the first and best approach in your financial arsenal to pursue.
For the most part, home-equity loan comes with low interest rate and the interest may be tax deductible. Shop around. Think it over real good because you could lose your home.
You can withdraw from your IRA with no interest and no penalty as long as you put the entire amount back in your account within 60 days of withdrawal.
You can borrow from your 401(k) account for college tuition or medical costs, or perhaps to make a down payment on a house. Check with your 401(k) plan administrator for details.
You get this type of loan from your broker with usually lower interest rate. Historically your stocks and/or bonds are used as collateral. Discuss it with your broker and then ask around for second opinion.
Certificate of Deposit
You pay penalty for early withdrawal. If you have long-term high-yielding CDs from years ago, then you probably should not use this as a source of cash.
In a Nutshell
You must compare all possible sources for quick cash. Select the one that best suits you. Sometimes the credit card issuer might give you a better interest rate, though it is highly unlikely.