Some credit cards offer a cash advance option. But how good
a deal is this?
Not very. In fact, it can be downright expensive.
Because every time you use your credit card to withdraw
case, more fees kick in:
– Cash advances can carry an upfront fee of 2 percent to 4
percent of the amount advanced.
– The advances have a higher interest rate than regular card
– Interest charges begin to mount as soon as the money comes
out of the ATM.
– Many issuers also require you to pay down the balances for
purchases before you pay down the higher-interest cash
Here’s an example of how these fees kick in:
Assume you bought a television for $500 on your card and
then took out $50 in cash. Even though you pay the $50 back
the next day, you still lose your interest-free period
because the credit provider deems you pay the cash back
You’ll continue to forfeit your interest-free period up
until you have completely paid back the full $550. Any
future purchases will still be ahead of the $50 in the
The lesson is simple: Avoid using your credit card to
withdraw cash wherever possible. You’ll save money as a
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