Cash advances do not have a grace period, which means that interest starts to accrue on the balance as soon as the transaction is completed. Since your advance starts accruing interest the same day you receive your cash, start repaying the amount you borrow as soon as possible. Most cards don't offer a grace period for cash advances. You will start paying interest from the first day the cash advance is posted to your credit card.
For most credit cards, the APR for cash advances is significantly higher than the APR for purchases. Cash advance interest rates typically range from 17.99% to 29.99% As we mentioned earlier, a credit card cash advance starts accruing interest, at a high rate, as soon as the transaction reaches your account. This means that you should pay the advance in cash as soon as possible, as you don't even wait until your credit card bill arrives soon. To get a cash advance from an ATM you need your physical card, as well as a personal identification number (PIN) provided by the card issuer.
You may also be subject to daily ATM withdrawal limits and fees similar to those applied to checking accounts. In addition to the transaction fee, cash advances will accrue interest charges, as do regular purchases. Unlike standard credit card purchases, which offer a grace period between purchase and the payment due date when interest is triggered, a cash advance transaction usually starts accruing interest immediately. This example highlights the importance of paying more than the minimum amount to minimize the cost of a cash advance.
Many credit card companies code certain purchases as a cash advance if they consider the purchase to be a cash-equivalent transaction. You can access a cash advance at an ATM, your card's financial institution or by issuing a convenience check. Instead of getting a cash advance to pay a bill, you may be able to ask your creditor to extend or change its due date. You can often limit interest and transaction fees by charging purchases to your card instead of getting a cash advance.
While the process may seem similar to withdrawing money with a debit card, what you're actually doing is taking a cash advance from your credit card, says Jason Gaughan, senior vice president of Consumer Card Products at Bank of America. Without a grace period, interest on your cash advance starts accruing the same day you receive your funds. You usually receive a cash advance from an ATM or a bank that works with your credit card payment network (Visa, Mastercard, American Express or Discover). On the one hand, you should explore whether you can use your credit cards to make a purchase, rather than a cash advance.
If you know there is a cash advance in the future, consider a credit card that offers 3% cash advances, such as the Capital One Venture card, instead of those that charge 5%. But the problem is in the details, and you need to fully understand what you are getting into before exercising your cash advance option. In addition to getting a credit card cash advance through an ATM, you can also use what is known as a convenience check. The fee is likely to cost you; cash advances usually have a higher transaction fee and annual percentage rate (APR).