3 Reasons to Say "No" to Credit Card Cash Advances
If money is tight, the prospect of a credit card cash advance may seem appealing and helpful. Credit card cash advances are quick, short term loans that give you sudden access to funds as much as a few thousand dollars, depending on your credit score, bank and the terms of your account. But these advances come with a lot of strings attached, many of which are deal‐breakers that can adversely impact your credit score and more. Below are some reasons you should think twice before accepting credit card cash advances.
High Interest Rates Interest rates on credit cards are already high. Combine that with the exorbitantly high rates on cash advances and you have a recipe for financial disaster. Rates vary by each card, but it is not unheard of for cash advance interest rates to soar as high as 35 percent!
No Grace Period Many credit card lenders offer members grace periods that are equal to one full billing cycle before interest charges for preceding months are tacked on. This is not the case with cash advances as there are no grace periods, meaning the interest starts as soon as your first transaction posts to the account. The only way to minimize these effects is to pay the money back as soon as possible.
More Fees Along with sky‐high interest rates come additional fees. For example, when you withdraw cash, you pay on that. Some card issuers charge up to 5 percent in withdrawal fees while others may charge a flat fee, between $5 and $10. If you collect your money at an ATM, you will also likely be billed a fee from the bank that runs the ATM, which usually runs anywhere from $2 to $5.
Those cash advances seem like quick, easy money but they can be slow and hard to pay back. Consider the costs before agreeing to them.
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