Credit Card Cash Advances
8 Oct
Everyone has run into the times when they need cash, but only have a credit card. So the decision is made to withdraw cash from an ATM using the credit card. Usually, people never think twice about this decision. However, taking a cash advance on a credit card can be a very costly decision. It is a decision that many people come to regret after taking a look at their bill.
For starters, most credit companies add an additional two or four interest rate on cash advances alone. This means that instead of paying the average sixteen percent interest rate, you are now paying a twenty percent interest rate. What is more is that this interest will continue to mount on until the credit card is paid in full in many cases. Not many credit card companies will allow the consumer to call and specify that their current payment is to be applied to the cash advance. The credit card company is making money off of the cash advance, so they are less likely to work with the consumer.
Secondly, there is no grace period for cash advances. The interest begins to mount onto the amount of cash withdrawn once it is taken from the ATM. So for those who shrug the added interest off and say that they will pay it all off on the next bill…think again.
The cash advance rules that credit card companies have are no secret. However, the majority of credit cardholders have no idea that these rules even exist. By law, the credit card company has to give this information. It is usually found on the back of the credit card agreement when the consumer opens the card, but not many take the time to read the very fine print on the back.
So what should a consumer do? Many times there are no ways to get around taking cash from the credit card. We have all been in situations where the car had to get fixed or the electric had to be paid. That is the way life goes. However, planning for these little occurrences can help out tremendously. For starters, have a savings account to dip into when little things like this happen. This will lessen the extent to which you rely on the credit card. Secondly, if this is not an option and you must use a credit card, make sure that you shop around for a credit card that offers the lowest fees and rates.
