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Credit card advances carry sticker shock

6 quick-cash traps to avoid
Credit card advances carry sticker shock

Taking advances through your credit card might seem like the easiest way to lay your hands on some cash, but you'll pay through the nose for that convenience. Uninformed borrowers "think that a cash advance will be at the same interest rate as purchases on their credit card, but the (cash advance) rate can be double," says Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling. Also, unlike ordinary credit card purchases, the interest for a cash advance begins to accrue from the moment the funds are received, not after a 30-day grace period.

Freeman adds that many card issuers require the balance on your regular purchases to be paid down before they'll apply payments toward the cash advance. If you can't bring your balance to zero quickly, you could be stuck accumulating interest at a high daily rate for a long time.

If you must: Use a credit card that has zero balance and pay the advance back speedily.


 

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