credit cards

Credit card advances carry sticker shock

Credit card advances
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 Cunningham.

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.

Thankfully, a 2009 law put an end to a credit card company practice of forcing consumers to pay off their regular balance before they could pay off a cash advance. Now, issuers must apply any amount a cardholder pays above and beyond their monthly minimum payment to the highest-interest balance they have. Because cash advances usually have a higher interest rate than regular balances, that means cash advance balances usually get paid off first.

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


 

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