From time to time, you may need cash, but you don't have anything but credit cards. Maybe you're in a café that only sells cash, or your taxi driver won't accept plastic. Whatever the reason, a credit card cash advance may seem like a tempting option. A cash advance is a short-term loan in your credit card account.
It's a simple transaction that can have very expensive consequences. Most of the time, it's a terrible idea. Cash advance is a normal feature for most cards from Issuers such as Chase, Citibank, Discover, Capital One, etc., offer this as a convenient standard feature for their card customers. There is a separate cash advance limit, which is normally lower than the normal credit limit.
The rate of use of cash advances has fallen by about a third in recent years, and that is a big drop. You may have a fantastic rate for purchases, but use your card for a cash advance and you may end up with an interest rate on the cash advance you are flirting with an interest rate of 20% or higher. However, if you find yourself considering making cash advances solely because you forgot to carry cash, you may want to check debit cards that don't have ATM fees. Depending on what you use the cash advance for, ask if you charge the service or fee directly instead of paying in cash.
It doesn't make sense either because why should there be a difference? After all, whether you take a cash advance or pay for goods and services, you're still spending money on your card. If you have good credit, getting a personal loan from a bank or credit union is likely to be cheaper than a cash advance with a credit card. As mentioned above, you can simply go to an ATM or ATM to get a cash advance from your credit card. The survey found the highest cash advance rate on First Premier Bank credit card (36 percent), followed by Visa BP, Visa Texaco and Exxon Mobil SmartCard (all around 30 percent), and Shell Platinum MasterCard (28 percent).
Many banks and online lenders offer personal loans or lines of credit, which generally have lower interest rates than cash advances. Avoid cash advances like the plague; and if you find yourself “in need”, take a cold and hard look at what exactly has placed you in the financial position you are in, and do something about it. According to a new report from the Consumer Financial Protection Bureau (CFPB), the percentage of Americans who use their credit cards for cash advances has dropped significantly in recent years. Many consumers mistakenly believe that a cash advance isn't such a bad idea because it's no different from any other credit card purchase.
While it may be tempting, an emergency cash source that should be used sparingly, financial advisors say, is a credit card cash advance, which is an expensive way to borrow money. If you go into a bank and request a cash advance on your credit card, you may find yourself paying the bank to help you with the transaction. Yes, there are times when it seems like a cash advance is best, but in most cases it's best to avoid this particular feature of your card. Convenience checks sent to you by credit card companies may also have the same characteristics as cash advances, unless they fall below a promotional interest rate.