Credit Card ‘Cash Advance’ Fees
The cash advance charge on most credit cards can be an unwelcome, and often unexpected, surprise that can throw your entire budget out of the window, and lead to struggling to repay your credit card debts.
If your lender classifies a transaction as a cash advance, it can trigger a higher rate of interest for that transaction – often over 25%! – even if you have a 0% interest deal, cash advance transactions are not covered by this deal. You are also charged this interest from the day you take out the cash, unlike other transactions which usually have a period of one or two months before you pay any interest.
So, What Counts as a ‘Cash Advance’?
- Cash Withdrawals
The most obvious, and well known, cash advance is when you take out cash from the ATM. If you need cash, always try to use your credit as the last option.
A lesser-known cash advance is when it comes to gambling. If you use your credit card in a casino it will count as a cash advance, this is understandable, and most people will steer clear of this, however if you gamble online and use your credit card to place your deposit, then this also counts as a cash advance. This is where people can fall down, as many people don’t associate ‘online’ with ‘cash’. Other things to consider is that if you play the lottery, this counts as gambling and incurs a cash advance fee, but also things such as fantasy football. So be careful.
- Foreign Currency
This one is a little more obvious, but buying a foreign currency also incurs a charge. This can be avoided with a travel card – ask your provider. This also includes the purchase of cryptocurrency.
- Gift Card
If you think about it, this one kind of makes sense, but many lenders consider gift cards as ‘cash advance’ so can fall foul of the charge. Not all lenders consider a gif card as a cash advance, so it’s hard to know which you will be charged for, if at all possible, pay for gift cards with cash or a debit card.
Not only will using a credit card cash advance cost you more money, through interest and charges, but it could also have a significant negative impact on your credit rating, which will affect your chances of taking out further credit. Many credit report companies see cash advances on credit as a sign of financial difficulty, which could have an effect on their decision to approve you for further credit.