Cash Advance Credit Cards

Cash advance credit cards provide an opportunity for you to withdraw money from an ATM by using the card. In many situations, this type of card is a good option for individuals who need to have access to cash. However, it is also one of the most expensive ways to access money.

How Does It Work?

Cash advance credit cards provide you with the ability to borrow from the credit card by withdrawing funds from an ATM. Most still allow you to use the credit card as you normally would, too. However, in situations where you need to have cash only, this can be a beneficial card feature to have. If you do need a card that offers this, you need to know a few things.

  1. Ensure you know the fee associated with these cards and transactions. In most cases, the cash advance will have the highest allowable interest rate compared to other credit card interest rates.
  2. In some situations, when you make a payment on your credit card, the payment applies to the lowest interest rate transaction first, until it is paid off, and then to the higher rates. This may mean you will need to pay off the cash advance longer.
  3. If you find yourself in an emergency and need cash, know where you can withdraw funds using the credit card. On top of the interest rate fee and any transaction fees you need to pay to the card lender, the ATM fee may be in addition.

For most people, this type of credit card transaction should be avoided. Since most companies, utility organizations and even restaurants now take credit cards, it may be a better option to choose a credit card that has a lower interest rate and to use it for purchases you need to make.

When to Use It

In most general cases, consumers should avoid cash advance credit cards or using the cash advance feature on their card until they know that it is the only option for them. Because of its high cost, and because this feature can be hard to pay off, it may be a very costly option.

Convenience Checks

Another option to take into consideration to help you to avoid paying these high rates is a convenience check. Many credit card companies offer these. In short, this is a piece of paper that looks just like a check and you can write it out to anyone you need to. The fees range widely and you should look into them prior to agreeing to using these checks. However, there are a few things to keep in mind.

  • Most of the time, these come with a low promotional interest rate, sometimes even zero percent for a set amount of time.
  • You may have to wait for the check to clear to have access to the funds, which means it can take longer than going to an ATM.

In some situations, convenience checks are a better option overall than the use of cash advance credit card features. Compare your options closely before choosing either one.