The Cons of Credit Card Cash Advancces
It is easy to turn to your credit card when you are looking for some quick cash or some money to make a large purchase. While it is certainly a simple and convenient process, it is important to keep in mind that that there are some major disadvantages to getting a cash advance through your credit card.
The biggest disadvantage is the fact that there are generally large fees associated with cash advances. These charges are usually calculated as a percentage of the amount of money you are taking out. Often, this is 5% of what you get from the card.
The other major disadvantage of cash advances is the finance charges. Finance charges for cash advances are usually much more than the interest rate applied toward purchases, which is usually already quite high! In addition, credit card companies apply your payments toward the balance that applies toward purchases first. In this way, the cash advance balance and higher interest rates stay on your balance longer and the bank makes more money. So, while credit card cash advances may be convenient and simple, consider the impact the fees and finance charges will have on your pocketbook before deciding to withdraw that cash.