Credit Card Cash Advances Should be Avoided

Why You Should Avoid Credit Card Cash Advances at the ATM

It is very easy to secure a cash advance from your credit card. However, you should not do this unless it’s a severe emergency. Credit card cash advances are one of the most expensive ways in which to borrow money. The choice to obtain cash from your credit card could appear alluring, yet a cash advance is absolutely nothing like taking out money from your debit card. Credit card cash loans are pricey as well as can quickly bring about credit card debt.
credit card cash advances on credit cards

Fees Charged with Credit Card Cash Advances

Cash Advance Charges

Cash advance costs commonly vary from 2% to 5% of the cash advance, with most credit cards billing on the larger end.

This percentage fee is charged for a cash advance at the time of the transaction. The cost on a $200 cash advance is $10.00 if the fee charged is five percent.

ATM Charges on Credit Card Advances

Along with the cash advance cost, you’ll additionally be charged an ATM fee, from $2 to $5, depending upon which bank’s ATM you utilize. It is important to consider that the ATM at the bank as well as your credit card provider might both charge ATM fees.

There is a Greater Interest Charged on Credit Card Cash Advances

The longer it takes you to settle a cash advance, the more interest you’ll pay.

Credit card cash advances usually have a greater rate of interest when you compare it to the interest rate on balance transfers. You pay more interest on a cash advance than you would for a balance transfer within the very same quantity of time.

There is no interest-free grace period on credit card cash advances. You start paying interest on day one.

With many cash advances on credit cards, if you’re just paying the minimum payment, the cash advance balance will not lower. That’s because the rates of interest on cash loans are greater than with credit card purchases. If you make the decision to take out a cash advance, it may suggest you’re in danger of dropping behind on your credit card payments. Individuals that get cash loans on their credit cards are more likely to have credit problems compared to people that do not.

Two Alternatives to Avoid Credit Card Cash Advances

First, see if you can borrow money from a family member or friend. It may be difficult to ask, but a loved one may want to help you in your time of need. This way you can avoid all the high cash advance fees. Please remember that if you do you will want to define the terms of the loan. More important you will want to fulfill these conditions promptly.

Old Advice Was to Use Credit Cards For Cash Advances When Traveling to Foreign Countries

The second alternative to avoid cash advances is not to use your credit card at ATMs in foreign countries to receive local currencies. Bring U.S. dollars and take them to a reputable bank that will convert your money at much lower fees. Only if you don’t have direct access to a bank should you consider a cash advance on your credit card through an ATM. Foreign currency exchange businesses can charge you more in fees than credit card cash advances at ATMs. Look at the conversion rates before doing business with a currency exchange kiosk at the airport or tourist area.

The best alternative is to bring a credit card that does not charge foreign transaction fees. You might need to call your bank to learn if your credit card charges 2% or more on purchases in foreign countries. CreditFast.com recommends Capital One® to travelers. Every Capital One® Credit card does not charge a foreign transaction fee. Using Capital One® makes traveling internationally easy. Many countries now widely accept credit cards in many retail locations.

Credit Card Cash Advances – Ignore the Old Advice from the Past

At one time certain credit cards were more prevalent in certain countries than others. For example, as early as the nineties credit cards were not as commonly used in Europe as in the United States. When credit cards were accepted, one company was clearly more dominant than the others. MasterCard® was far more in use than Visa® in Germany. If you were to cross the border into France, then Visa® was more commonly used than MasterCard®. That could make things tough if you brought one credit card.

This is why many people back twenty years would go to ATMs and take out money with their credit cards. An ATM would typically make credit card cash advances on any major credit card. Most credit cards in central Europe are widely accepted. This includes American Express® Cards but not Discover it® Card. Also, it is more common to see credit cards accepted at common places, and not just high-end retailers. This makes the need for high fee credit card cash advances nearly obsolete.

Monica Kowollik

Director at CreditFast.com
Monica has covered credit card and personal finance news for over 15 years. From an early age, she developed an interest in financial literacy and saving money. Monica hopes to help others to improve their personal finances one article at a time.

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