Your credit card allows you to withdraw some cash which will be a part of your credit line. But, you should know that when you withdraw cash from your credit card, then there are a number of fees such as service fee, cash withdrawal interest fee, and fine print issues that will be considered by your bank. Hence, getting a cash advance is not a one time affair. So, you can now easily say that withdrawing cash from any of the credit card is very easy, however, one should be aware of all the charges and other expenses associated with taking a cash advance before taking out cash from any ATM. Most of the banks charge higher interest rates on cash withdrawals than they do on other purchases, but, still there are few credit cards that offer no percentage of interest fees for the one year.
As discussed, most of the credit cards charge you some interest when you withdraw cash, so if we will check this percentage of interest then in all the banks the rate of interest on cash advance is never less than 2.9 percent. Apart from this interest fees, some of the cards even levy service fee which is approximate $10. Hence, taking out less than $300, can be considered as an expensive affair. Also, regardless of your credit, you will always be charged around 22-23 percent higher on your cash advance than on other purchases, and this is not any exception, rather it’s a rule.
Another major point that you need to consider while withdrawing any cash from your credit card is that the moment when you repay your credit card, your payment first go to the balance that is charged at the lowest interest rate and after that it goes to the cash limit. This is an unfortunate trap for many cash advance users but this is how the credit card companies make people to pay them higher amount.
However, you can surely find a number of ways to save yourself from being a prey to these credit companies. The best way is to find offers that will give you a 0% interest rate for 1 year. At the end of that year, you can easily pay the cash advance balance in full and if possible, then transfer that balance to a 0% balance transfer credit card. But, you may have to pay a very high interest rate, if you will not be able to repay the cash advance and that can be a cumbersome task for you as the interest may be around 23-25 percent.
Hence, it’s always recommended that you should use your cash advance in a better way in order to save a lot of your money which entail after every cash withdrawal. You can effectively use your credit card cash limit without falling prey to the traps in the credit card's interest fees and fine print.
Author Resource:
Josh Ross is the author of this article on Cash Loans .
Find more information about cash loan here.
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