Credit cards are accepted in most situations that call for some sort of financial transaction, but there are times when cash is preferred to a shiny piece of plastic. Perhaps you need money to pay rent or make some other purchase that can only be done with cash-money. Cash can be quite handy, but only when it is procured without interest. Don't trick yourself into thinking that a credit card cash advance is the same as using your credit card to make a purchase. There are some pretty hefty fees and regulations attached to this service that you need to know about before you decide to get cash from your credit line.
Probably the most important thing to know is the interest that applies to normal credit card purchases does not apply to cash advances. The rate is actually much higher. Rates vary slightly from creditor to creditor, but usually the interest rate on a cash advance will be anywhere from 20 to 25 percent. This comes as an upsetting shock to many people who aren't aware of the separate interest rate tied to a credit card cash advance.
Some creditors charge you a processing fee of two to four percent of the amount you're advanced, while others charge a flat fee--regardless of the amount you take or how often you take it. In other words, your credit card company could be charging you $10 just for allowing you the privilege of withdrawing $20! There are also the ATM fees to account for. So, after taking into account the amount of the withdrawal itself, plus a $10 fee (this is just an example as fees vary), plus 25 percent interest, plus approximately $2 just for using the ATM, what is the total amount you're dishing out? If you are advanced $100, you are actually paying closer to $140!
While regular purchases tend to carry a grace period for making payments, cash advances do not. From the second your money shoots out of the ATM, interest charges begin to accumulate. Many card companies require that you pay down the balances for regular purchases before you start paying the higher-interest cash advance balances. This is one of the many ways in which credit cards can get the best of you, but the more informed you are the less likely you are to fall victim. All of this information is, by law, fully disclosed in most promotional materials and credit card applications.
Whether you're an existing card-holder or looking to become one, it would serve you well to wade through all the fine print that accompanies credit card applications and offers. It's obvious that the benefits of taking out a credit card cash advance are not worthwhile compared to what it costs. And unfortunately, people who resort to cash advances are usually at a very financially insecure place as it is. The added charges only perpetuate those circumstances in many cases.
Credit cards can be tricky little devils. They can be extremely convenient in some situations, and downright dangerous in others. This is especially the case when it comes to getting a credit card cash advance. You have to make a judgment call on whether the fees and interest are really worth it. A good rule of thumb: a credit card cash advance should only be your very last resort for getting cash.
Written by Kacy Suther. Get an instant approval credit card and other credit card offers for low interest credit cards. Credit card applications available online at credit-card-depot.com .