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Article Series: Debt Relief & Debt Consolidation
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Credit
Card Checks and Cash Advances
Once you have a credit card in your hand, you’ll find that
you can do more with it than just pay for things. You might
be sent a check book for your credit card, for those few times
you need to pay someone who cannot accept your card.
You may also be offered cash
advances – a way of withdrawing
cash directly from your credit card, either to your bank account
or from a cash machine. This is designed for when you need
cash in an emergency. You really shouldn’t overuse either of
these features, and here’s why.
You Pay More Interest.
With most cards, checks and advances are charged at a much
higher rate of interest than normal spending. You often give
up any interest-free period (which can be up to two months),
meaning that you start paying interest on the money literally
from the minute you spend the money. Not only that, but most
cards will also charge a fee each time you use cash advances
or credit card checks – and using an ATM may increase the fee
even further.
It Marks You Out.
When you use a credit card check or accept a cash advance,
you are showing that you’re not just using a credit card for
convenience – you really need the money. This marks you out
in the credit card company’s records as someone who shouldn’t
be given a good deal. After all, you won’t be going anywhere.
Try to Spend With the Card Instead.
Instead of using cash to pay for small things and finding
you have to take advances or use checks to pay for bigger things,
it’s better to do it the other way around. If you find yourself
in a situation where you’re relying on advances, you should
start using your card for smaller things where you wouldn’t
usually bother, just to avoid taking the advances and paying
more interest. Be strategic in how you spend.
Remember that there are very few bills now that must be paid
for by cheque, so there aren’t many reasons to ever use credit
card checks. If you’re willing to call them up and wait in
their queue for a while, the chances are you can get them to
accept a credit card payment just by you reading the number.
Look Out for Advance Limits.
If you start relying on cash advances, sooner or later you’ll
probably run into an advance limit. The credit card companies
don’t advertise it, but many of them have limits on how much
of your balance can be cash advances and how much must be in
purchases. Try to find out these limits before you start taking
advances.
Remember They Get Left For Last.
When you pay back your credit card debt, most lenders will
put your payments towards the lowest-interest money (your purchases)
first, and then towards other lending. That means that you
keep paying that high interest on the cash advance or checks
until you get your balance all the way down to zero.
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by SolveYourProblem.com
: 2006
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