I know it's tempting. You get that check in the mail from your credit card company. They tell you to use it to pay your bills or use it to go and splurge. Don't do it! If you read the fine print, you'll find these checks are just like a cash advance on your credit card. A cash advance can have a sobering affect on your credit card balance.
How Are Cash Advances Different From Regular Purchases?
Here are the things you need to be aware of when your credit card advances cash to you:
- You begin to accrue interest the moment you receive the advance. That means as soon as the check is cashed or you get an advance at an ATM using your credit card with the pin they give you.
- Your credit card will charge you a fee of 2-4% of the advance. So, you'll get a fee of $8.00 on a $200 advance.
- The interest rate is much higher than the interest rate charged on purchases, which escalates your credit card balance quickly.
- The cash advance is not considered paid until you pay off your balance in total. This means you're always paying that higher rate of interest until your balance is paid in full.
What Should You Do About Cash Advances?
- Never, never get a cash advance from your credit card.
- Shred the checks that come in the mail from your credit card. You don't want someone going through your trash and taking the check and using it.
- Destroy the pin that comes with your credit card so you wont use it at an ATM to get an advance.
Receiving a cash advance can make your balance seem more insurmountable than ever; it adds to the intensity of your dire situation. I'd like to know how often you receive a check in the mail from your credit card and if you've ever used one.