Some credit cards allow you to take cash advances and have them directly transferred to a checking account. However, these transactions aren’t without their drawbacks. Typically, cash advances can be very expensive: they can carry fees and higher interest rates than regular credit card transactions. With this in mind, finding an alternative to cash advances may serve you better in the long run.
What are cash advances?
Many credit cards come with a cash advance feature that allows you to borrow money from your credit line. While cash advances usually work with a PIN code at an automated teller, some credit cards give you other ways to take them. For example, you may have gotten checks with your credit card that you can deposit in your bank, or your card issuer may allow you to directly deposit a cash advance either by making a request to customer service or by using your card issuer’s website. To learn if your credit card offers cash advances, check their website, your most current statement or contact your creditor directly.
Do cash advances cost money?
Cash advances are typically fairly expensive. While every card issuer can set its own rates, you will generally pay a fee for the cash advance that is tied to the amount of money you pull out. In addition, your cash advance will usually be subject to interest, frequently calculated without a grace period and often calculated at a higher rate than what you’d pay for purchases. Check to see if the cash advance is worth the expense or if there’s a way you can avoid the debt.
Alternatives to cash advances
Before getting a cash advance from your credit card to pay your bills, look at the payment options your creditors will accept. Many utility companies accept credit cards, although some charge service fees. Some landlords will even let you charge your rent and, if they won’t, there are services that will take your card and send your landlord a check –sometimes for a fee. You may even be able to charge a down payment for a car. All of these options go right to your credit card as a purchase, allowing you to avoid the additional expense of a cash advance.
The Bigger Picture
Cash advances can be useful financial tools when you need to access money quickly. However, paying high interest to borrow money is never an ideal financial move – you usually want to avoid this common credit mistake. If you find yourself taking cash advances to meet your daily bills, you may want to step back, take a look at your finances, and build a personal budget that lets you meet all of your obligations without having to regularly borrow money.
About the Author
Solomon Poretsky has been a writer since 1996, with experience in the fields of financial services, real estate and technology. Poretsky holds a Bachelor of Arts in political science from Columbia University.
This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.
Published by permission from ConsumerInfo.com, Inc. © 2013 ConsumerInfo.com, Inc. All rights reserved.