Top Reasons to Steer Clear of Using Credit Card Cash Advances

While withdrawing cash from your credit card may seem convenient, it comes with significant drawbacks. Unlike debit card withdrawals, cash advances on credit cards are costly and can lead to financial difficulties. You can obtain a cash advance through an issuer-provided convenience check or an ATM. Experts often advise avoiding cash advances, and here’s why:

Cash advances involve hefty fees, usually a percentage of the amount or a fixed minimum fee. These charges typically range from 2% to 5%, with many companies charging on the higher end. Additionally, ATM fees apply, depending on the machine used.

Cash advances accrue interest at a rate higher than regular purchase rates. Even if you repay promptly, the interest cost remains elevated, and delays in repayment lead to increased charges.

Unlike purchases, cash advances do not have a grace period. Interest begins to accumulate immediately from the transaction date, making early repayment essential to limit costs.

Relying frequently on cash advances may indicate underlying financial issues. Consider alternatives such as personal loans, payday advances, or negotiating extension options with creditors. Always evaluate your financial situation carefully before opting for a cash advance. It should be reserved for emergencies only, as regular use can lead to mounting debt and poor credit health.