Cash Advances
Many people, at one time or another, have relied on a cash advance from their credit card. Its fast, it’s easy – just one smooth slide with your card into an ATM and bingo! Cash! While a cash advance on your credit card may be helpful in the short term you need to know that cash advances attract very high rates of interest. One consumer advocacy group says the average annual rate of interest 22%. Compared with the loans interest rate on regular credit card purchases of about 18% on average. The actual range for interest rates falls between 11% and as high as 30% for some store credit cards.
Keep in mind that most credit card companies apply payments first to regular purchase balances which have a lower interest rate than cash advances. This makes it a whole lot harder for the average consumer to pay down the debt from the cash advance as it just keeps attracting high interest. If possible and if you must rely on a cash advance, try and use a credit card with no balance at all on it and then pay off the advance by the payment due date shown on your statement before you make regular purchases with that card.
