Need physical cash fast?

Pulling cash from your credit card might seem like an easy solution, but it can end up costing you far more than you expect!

Here are the biggest reasons to avoid it:

(1) Interest Starts Right Away

With regular credit card purchases, you usually get a grace period until the billing cycle closes before interest starts.  Pay your bill on-time in full and you don't have to pay any interest.

However with a cash advance, interest starts accumulating the moment you take the money out.

(2) Higher Interest Rates

Cash advances often have a much higher interest rate than regular purchases, so the balance grows even faster.  You can see the list of APRs (interest rates) at the end of your credit card statement to see exactly how much higher the rates are for pulling out cash.

(3) Extra Fees

Most credit card companies charge a cash advance fee, usually 3% to 5% of the amount borrowed, on top of the interest.

Plus, if using an ATM machine to access the cash you may also have to pay a fee to the ATM company.

(4) The High-Interest Balance Can Stick Around

This is the part many people don't realize.
Credit card companies apply payments to the balance with lowest interest rate first!

Let's say you have:

  • A $1,000 cash advance

  • $4,000 of regular purchases on your card

If you make a $4,000 payment - even if you took the cash advance before making purchases - the payment will go towards the purchases and leave your cash advance balance accruing interest at the higher rate.

The result? If making partial payments to your card, you'll end up paying the higher interest on that cash advance much longer than you expected.

It Doesn't Solve the Problem

Remember, a cash advance doesn't create more money. It simply moves today's cash shortage into the future, while adding fees and interest along the way.

In Summary

A credit card cash advance is one of the most expensive ways to borrow money. Between the fees, higher interest rate, immediate interest charges, and the risk of carrying that balance longer than expected, it's usually better to look for another option whenever possible.

Quick cash today can easily turn into a much bigger bill tomorrow.