Using a credit card to get cash advances is usually a very costly transaction.
You are much better off using your credit card to make the purchase at the point-of-sale than by taking money out of an ATM with the card. There may be times, however, when you need cash and have to rely on your credit to get it. In these cases, there are some things you can do to keep the price lower and not end up paying ridiculous interest rates on the cash advance balance.
Credit card cash advances
If you find that your credit card usage involves withdrawing money from ATMs quite often, you have a few choices. The first one is to look for a credit card that has a low interest rate on cash advances. These cards are rare and the interest rate is still typically considered high. However some are better than others and with a little work you can track them down. You may end up paying a higher interest rate on your purchases, however, so make sure that you take a good look at all the credit card features before submitting an application for one.
Use a debit card
This is a much better option for withdrawing cash since you will not have to pay a fee if you take the money from a bank machine that is associated with the bank you deal with. There will be no interest to pay since debit cards don’t offer any kind of credit and you will be able to stay within your budget. Of course, if a situation arises and you need money immediately that simply is not available in your account, you may have to use your credit card to get some instant funds.
Avoid cash advances overseas
If you’re travelling abroad, you should avoid using your credit card for any cash advances. Not only will you have to pay the high fee associated with a cash advance but other fees as well. Don’t count on your credit card for cash while you are on a vacation since it simply is not worth the extra money you will have to pay.
There is no grace period on cash advances so this means that the interest is applied immediately every time you withdraw money using your credit card. This interest rate is usually different from the purchase rate. If you have a low interest rate credit card, it does not mean that the interest rate is low on cash advances. It usually means that you will pay a low rate on your purchases only.
If you have found yourself in a situation where you did have to make a cash advance, the ideal thing you can do is make payments to your card every time you can. Don’t wait for your statement to come in since interest is accumulating daily. The sooner you can pay off this cash advance, the better off you will be.
You should also keep in mind that there are other transactions that are considered a cash advance. These include purchasing traveller’s checks, getting cash back at shops, any purchases that are made at gambling establishments, and foreign exchanges.
Use cash advances cautiously and pay back the money owed on them as quickly as you can. Cash advances made with a credit card should only be done in an emergency situation when a debit card is out of the question.Back to top