How do cash advances from a credit card work?
Many consumers are unaware that every time they use their credit cards to withdraw cash, extra fees kick in: • Cash advances carry an up-front fee of 2 percent to 4 percent of the amount advanced. • They have a higher interest rate than regular card charges. • They carry no grace period; interest charges begin to mount as soon as the money spits out of the ATM. • Many issuers also require you to pay down the balances for purchases before you pay down the higher-interest cash advance balance. The fees and charges applied to cash advances are not hidden fees. By law, card issuers are required to disclose information about fees and charges associated with all of their services. This information is typically displayed on the back of the solicitation form and on the monthly statements.
