{"id":12266,"date":"2020-07-29T08:59:35","date_gmt":"2020-07-29T08:59:35","guid":{"rendered":"https:\/\/www.openbusinesscouncil.org\/?p=12266"},"modified":"2020-12-13T14:11:19","modified_gmt":"2020-12-13T14:11:19","slug":"what-to-know-about-credit-card-cash-advances","status":"publish","type":"post","link":"https:\/\/www.footballthink.com\/what-to-know-about-credit-card-cash-advances\/","title":{"rendered":"What to Know About Credit Card Cash Advances"},"content":{"rendered":"
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Many Americans were already living paycheck to paycheck before the COVID-19 pandemic. But as of spring 2020, it\u2019s safe to say even more U.S. consumers have found themselves in a precarious financial position.<\/p>\n
According to PYMNTS.com<\/em>, nearly six out of 10 Americans say they\u2019re living paycheck to paycheck<\/a>. This means any interruption in work \u2014\u00a0like an unpaid furlough or layoff \u2014\u00a0can leave them unable to keep up with monthly expenses. Anyone who\u2019s been in this situation knows how stressful it can be. It\u2019s also very difficult to save when most or all of your income is going toward living expenses and debts, leaving you with a thin cushion if\/when a financial emergency pops up.<\/p>\n A credit card cash advance may sound tempting when money is tight \u2014 whether you need it to cover a one-time emergency, or you\u2019ve just fallen behind on routine bills.<\/p>\n Here\u2019s what to know about credit card cash advances.<\/p>\n We most often associate ATMs with debit cards, but some borrowers may be able to use their credit cards. Rather than drawing from a checking account, the money will count against your account\u2019s credit limit.<\/p>\n As U.S. News & World Report<\/em> outlines, cards typically carry an advance limit that\u2019s a portion of the card\u2019s maximum. So, a card with a $5,000 maximum purchase limit could have an advance limit<\/a> in the ballpark of $1,500 to $2,000 dollars.<\/p>\n Not every card allows cash advances, nor is there a universal fee or interest rate for borrowing money in such a way. You\u2019ll need to dig into your card agreement or talk to your card issuer to find details like these.<\/p>\n While a cash advance might do in a pinch, it\u2019s best to avoid getting into the habit of using them. Why? Because, all factors considered, it can be a very expensive way to borrow money.<\/p>\n NerdWallet<\/em> outlines three expenses<\/a> associated with cash advances on credit cards:<\/p>\n \u2022ATM\/bank fees<\/em>: You may have to pay a few dollars for the privilege of using an ATM.<\/p>\n \u2022Cash advance fees<\/em>: Your credit card company may either charge a flat fee (like $10) or a percentage of the amount you borrow (like five percent).<\/p>\n \u2022Interest charges<\/em>: Your credit card issuer may actually charge a higher annual percentage rate (APR) for advances than they do for regular purchases. Furthermore, advances can start racking up interest right away rather than allowing a grace period.<\/p>\n Credit card debt already tends to carry a higher average interest rate than other kinds of debt, like personal loans. In addition to enabling interest to accumulate quickly it compounds. This means your original balance and<\/em> the interest it accrues accumulate more interest, which increases your balance and attracts even more interest \u2014 infinitely.<\/p>\nYou Can Often Use a Credit Card at the ATM<\/strong><\/h2>\n
Credit Card Advances Can Be Quite Expensive<\/strong><\/h2>\n