But cash advances would be a bad idea under these conditions: ... To pay a credit card bill – A cash advance is a very expensive way to pay bills, and the risk of falling into revolving debt cannot be ignored. The potential to pay many times the amount of the original advance (in interest charges) is very real.
Fees: Some accounts have annual fees. There may also be fees for cash advances, along with high interest rates. In addition, you may spend more on interest and fees than you earn in discounts or cash back. Make sure the benefits outweigh the costs.
Cash advances can (indirectly) hurt your credit score
When using a credit card cash advance, you are borrowing money from the bank or your card issuer (on top of any money you already owe on your card for making regular purchases and any other loans you have).
The main reason why taking a cash advance is such a bad idea is that you start accruing interest the minute you take the advance - unlike with regular credit card purchases, there is often no grace period.
Cash advances almost never make sense. Compared with the alternatives above, you might very well find that a cash advance on your credit card is the least expensive option once your crunch the numbers (though you might want to consider a bank account with no overdraft fees). However, it's probably not going to be free.
The best cash advance credit card is the PenFed Platinum Rewards Visa Signature® Card because it has a 0% cash advance fee and a low cash advance APR: 17.99%. All PenFed cards have 0% cash advance fees and fairly low cash advance APRs. But this is very uncommon for other issuers.
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Why cash advances are expensive
This is because cash advances can come with a variety of expenses: Cash advance fees. These are imposed by your card issuer. Some cards charge a flat fee per cash advance, say $5 or $10.
The cash advance limit is the maximum amount of cash that may be advanced against a credit card's balance. ... Finally, the daily limit is the maximum amount that can be charged each day to a credit card. This can also be considerably lower than the credit limit and is intended as an anti-fraud measure.
Cash Advances Have Limits
Lastly, credit card cash withdrawals are almost always limited to a set amount, called the cash credit limit — usually around $300 to $500. That's because this type of loan should be considered only in a true emergency.
Yes, you can use most credit cards at an ATM to withdraw cash from the card's credit line. The ATM withdrawal will show up as a cash advance on your credit card statement. That means the amount of cash you get at the ATM will be subject to an immediate cash advance APR, and usually a cash advance fee.
Simply taking a cash advance won't affect your credit — it doesn't register separately on your credit report. There is no grace period. When you make a purchase with your credit card, you get a “grace period” of at least 21 days before you are charged interest on that purchase. This is not the case with cash advances.
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