• Facebook Facebook
    • Twitter Twitter
    • RSS Feed RSS Feed
  • Home
  • Blog
  • Credit Card News
  • Questions

Home > Credit Card Blog

Cash Advances: Know Before You Borrow

October 10, 2010 - 8:50 am

Cash advances are one of the features of credit cards that sound attractive until you get the first credit card statement after your cash advance. It’s then that you realize a cash advance isn’t like a regular credit card purchase. The cash you get from a cash advance might be the most expensive loan you ever borrow.

Higher Interest Rates

If you pay attention to your credit card billing statement, you might notice that there are several different APRs – one for purchases, one for balance transfers, and one for cash advances. You might also notice that the APR for cash advances is the highest APR of them all. This means that you’ll pay more interest on a cash advance than any other balance you carry on your credit card.

No Grace Period

If we were talking about purchases, a high APR wouldn’t be as big of a deal since you can always pay off your balance before the grace period expires and avoid paying interest completely. However, that’s not the case with cash advances which don’t get a grace period.

Interest starts accruing on your cash advance the day you withdraw it from the ATM. If you wait until your billing statement arrives to pay off the cash advance, you’ll have accumulated 25-30 days worth of finance charges by that time. To avoid paying so much interest, pay off the cash advance before your card statement comes in the mail.

Upfront Fees

Cash advances usually come with a cash advance fee that’s automatically added to your credit card statement. The fee is usually 2% to 4% of the cash advance. That’s $2 to $4 for every $100 you borrow.

Not only will you pay a cash advance fee, you’ll also pay an ATM fee if you use another bank’s machine to withdraw the cash.

Minimum Payments Won’t Matter

If you’ve made purchases on your credit card and then take out a cash advance, minimum credit card payments won’t reduce your cash advance balance at all. That’s because credit card issuers apply minimum payments to the balance with the lowest interest rate. Your purchases balance, which usually has the lowest interest rate, will decrease a little each month. Meanwhile, your cash advance balance will actually grow since interest is being added.

If you want to pay down your cash advance balance in addition to another, lower interest rate balance, you’ll have to send more than the minimum payment. Credit card issuers are required to apply above-minimum payments to the balance with the highest interest rate.

Cash Advance Rules

The cash advance rules not only apply when you withdraw cash from an ATM, but also when you use those convenience checks your credit card issuer sends. You’ll also be subject to cash advance terms and conditions if you use your credit card as overdraft protection.

Cash advances are expensive, but they have a place – when you don’t have access to cash and can’t use credit. Cash advances aren’t a good short-term loan, unless you have no other balance on your credit card and can guaranteed pay the money back within 7 to 14 days.

Similar Posts

  • 5 Dumb Things to Do With Your Credit Card
  • Understand Your Credit Card Grace Period
  • What Fees Can You Expect With a Credit Card?
  • What Credit Card Issuers Won't Tell You About Using Reward Cards
  • Applied Bank Secured Visa Gold Card Review
  • Recent Posts

    • Why Stay-at-home Moms Created a Petition against the 2009 Card Act
    • Credit Card Rates Stand at 4 Year High Mark
    • Average Credit Card Rates in December 2011
    • Obama Proposes Initiative for Making Credit Terms Easier to Understand
    • Aggressive Cash Back Credit Card Deals for the 2011 Holiday Season
  • Categories

    • Credit Card Blog
    • Credit Card News
    • Featured Articles
    • Spotlight

Home | About | Credit Cards | News | Blog | Questions


Privacy Policy | Terms & Conditions


Copyright © 2011 ApplyForACreditCard.com. All rights reserved.

By using our service and providing your personal contact information, you agree that ApplyforaCreditCard.com, any of its affiliates and any company you are matched with may contact you by any method of communication, including by telephone even if you are on a federal or state Do Not Call registry. This site is a free matching service intended to provide a variety of options and information, and is not responsible for any service/information provided by any third party provider. ApplyforaCreditCard.com is a marketing and advertising agency only. It does not supply the service provided for therein, rather it provides a matching service. Upon your submission of the information requested on our website, we re-direct you to one or more of our participating service providers. You are under no obligation to pursue business with any of the participating service providers in our network. We encourage you to review each service carefully before electing to do business with them. Further, you should review their privacy policy and terms on the their page and contact them directly regarding their organizations' policies.


The content, including without limitation any viewpoint or opinion, contained in any article or video posted on this website is for informational purposes only and does not necessarily reflect the opinion or viewpoint of ApplyForACreditCard.com. Any third party contributor to any such article or video has been compensated by ApplyForACreditCard.com for such contribution. It is advised that you conduct your own investigation as to the accuracy of any information contained herein.