How to avoid credit card cash advance fees

Grace periods do not apply to cash advances, which means you may incur unexpected interest charges. Find out how to avoid paying this interest.

Credit card issuers usually offer a grace period that gives you time to pay your bill without incurring interest charges on your purchases. The grace period usually lasts two or three weeks from the end of the billing cycle and will be incorporated into the due date of your bill. Pay your bill in full before the due date and no interest charges will be charged on your purchases. Carry a balance forward to the next billing cycle and you will be charged interest on the remaining balance.

However, the grace period generally does not apply to cash advances. Without a grace period, interest begins to accrue from the date a transaction is recorded. To avoid unexpected interest charges, you should check your credit card terms and adjust your payment strategy accordingly.

Credit card companies love cash advances because they generate significant revenue. Payments industry expert RK Hammer found that cash advance fees brought in $26.6 billion to card company coffers in 2016, or 27% of total fee revenue.

In addition to fees and the immediate accumulation of interest, cash advances generally carry higher interest rates than regular purchases. According to a recent survey by, 79% of cards charge more than 20% APR on cash advances, with 25.99% being the most common value.

When all the associated costs are taken into account – fees, a higher annual interest rate, and immediate application of interest – cash advances can seriously hurt your portfolio if not managed properly.

You can lessen the effect of cash advances by paying your balance in full as soon as possible. You don’t have to wait for the end of the billing cycle – you can pay your current balance anytime if you have the money to do so. Payments will be deducted from the current balance and reduce your statement balance at the end of the billing cycle. Any interest charges you have accrued will appear in the statement balance.

If you can’t pay sooner or pay the balance in full, pay at least as much as you can by the end of the billing cycle. Many cards will apply payments above the minimum amount to the debt with the highest interest rate. Check your card’s terms and conditions to see how payments are applied.

Keep in mind that banks may have definitions of cash balances that extend beyond ATM transactions that physically put cash in your hands. Wire transfers, money orders, foreign currency exchanges, paper convenience checks from your card issuer, overdraft protection advances, cash-equivalent purchases on PayPal, and even game chips from casino can all be considered cash advances. (Use this knowledge to help you resist the urge to go back for another round of casino chips).

Grace periods also do not apply to balance transfers, another potentially significant source of interest charges. When you do a balance transfer, you’re effectively paying off one credit card with another, usually to get a better interest rate and enjoy a 0% APR introductory period. It’s unlikely that you can simply repay a balance transfer quickly the same way you would a cash advance – otherwise, you wouldn’t be doing a balance transfer in the first place. Eligibility for a balance transfer card may depend on your credit score.

Essentially, a 0% APR on balance transfers is an extended grace period that only applies to balance transfer transactions, allowing you to repay amounts transferred during this period without accruing interest. All balance transfer offers will have limitations and some may contain fees, so make sure you understand the terms to avoid unexpected costs.

The keys to avoiding or limiting interest charges on transactions with no grace period are understanding your credit card terms and planning accordingly. Cash advances are generally impulsive transactions, but you can always limit their effects by fully understanding the consequences and applying as much tax discipline as possible. Maybe you don’t need that extra $100 in your pocket – or another series of chips that will disappear from your pocket before long.

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