Avoiding Cash Advances Like The Plague

Few things in life are worth banishing from your faculties. Cash advances, long staple features of many credit cards, should be one of them.

While credit card cash advances are a very convenient source of emergency funds, they’re just plain too insidious to warrant regular use. A single cash advance can easily net you an average 21% in interest charges. That’s $21 for a $100 loan, apart from the additional 3% fee (usually capped the same way as a balance transfer). Unless it’s a matter of life and death, nothing justifies paying that much for a quick hit of spending money.

If you need emergency cash and can wait a short while for them, a better recourse is to call your credit card issuer and ask for balance transfer checks. You probably get three of them every month along with your credit card statement. If you have them tucked away, pull one off and use it as a regular check to pay for your emergency bills instead. Balance transfer checks are usually counted as regular credit card purchases so they will prove much cheaper to pay off than a cash advance.

Only resort to a cash advance in a real emergency situation, when the need for the funds can’t be stalled. As a measuring stick, try looking at credit card cash advances the way you would probably look at a payday loan - incredibly convenient but a pain the ass to settle that you will want to avoid at all costs.