How much will a cash advance really cost you

Sometimes you just need a small loan to overcome a small cash flow problem. A cash advance on your credit card might sound good – and it could be – as long as you understand how these loans work and how much they actually cost.

A cash advance can cost “a surprising amount of money,” according to a new report from based on a survey of 100 major credit cards.

“Cash advances can be the best of a series of really bad options when times are tough, but it’s definitely something you would want to avoid under normal circumstances,” said Matt Schulz, senior industry analyst. at

With a cash advance:

  • Interest begins immediately. You don’t get the same interest-free grace period as you get with purchases.
  • The interest rate will be much higher than on your outstanding balance. Based on a survey of 100 cards, found that the average APR for cash advances is 24%. The average purchase APR is currently around 15 percent.
  • Expect to pay a fee, usually five percent upfront or $ 10, whichever is greater.

Among the cards studied, the highest APRs for cash advances were on the First Premier Bank credit card (36%), Visa BP and Texaco cards (each 29.99%) and the ExxonMobil SmartCard (29.95 %).

Related: Debt-averse Millennials Avoid Credit Cards

“Have a balance and only make the minimum payment each month and it may take even longer to pay off that high interest cash advance,” noted Gerri Detweiler, director of consumer education at “That’s because credit card companies are allowed to apply that minimum payment to the balance with the lowest rate – any purchases you’ve made – before using that money to pay off the cash advance.” . “

Despite all of this, Schulz told NBC News that a cash advance can be “the lesser evil” because it is cheaper than a payday loan, more convenient than a personal loan, and sometimes cheaper than an overdraft. your checking account.

“You just have to be sure you know what you are getting yourself into,” he said. “A lot of people have probably taken a cash advance without knowing it.”

For example, those paper “convenience checks” that you receive in the mail from your credit card company are actually a cash advance. In addition, wire transfers, money orders, legal gambling purchases, and bond payments made with a credit card are often treated as cash advances.

Herb Weisbaum is the ConsumerMan. Follow him on Facebook and Twitter or visit the ConsumerMan website.

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