A credit cash
advance is a trouble free way you can get cash anywhere in the
world. It is usually not expensive to get a cash advance on a credit
card, unless you are in another country. Credit card companies are
desperately striving ways to make money off foreign charges. And
they are succeeding.
Getting a cash advance is not like charging cash. It
is like getting a loan. That is why American Express and the other
travel and entertainment cards issued by companies that are not
banks can't give you a cash advance.
What is the difference between charging cash and
getting a loan? If you were charging cash when you got a cash
advance, you would normally have a grace period of twenty-five days
or so after you got your bill. Within that period you could pay off
the charge without it costing you any interest.
Interest on Cash Advances
A cash advance works in a different way: you get no grace period.
There is generally no way to avoid paying interest when you take out
a cash advance. The cost of advances is difficult to understand.
It is possible for a cash advance to cost you
interest on all the things you charge, even if they would normally
be interest free. How? Because some especially greedy banks
eliminate the no-interest grace period when you have a cash advance
outstanding on your account. If you have many purchases on your
account this can be very costly.
Killer Fees for Cash Advances
Many card-issuing banks charge fees for cash advances. This is like
a department store charging you a purchasing fee in addition to the
price of your new socks.. Some banks charge fees as high 4 or 5
percent of the amount of you get in the cash advance. When added tot
he 18-20% interest you are also charged, this can give the bank an
effective annual interest rate of 100 percent or more!
Even if you find a credit card that does not charge
a cash advance fee, getting cash advances for anything other than
emergencies (or when abroad; cash advances make sense as a way of
cutting foreign exchange commission and costs) is not a good idea
because , even without the cash advance fee, you still will be
charged interest on the cash advance from the day you take it out.
Remember, there is not grace period on cash advances, even with a
card that has a grace period on regular purchases.
Why pay very high interest charges just to get some
cash in your hand? Write a check on your bank account or make a
savings account withdrawal. Reserve cash advances for travel and for
emergencies and save yourself money.
