Finance Globe

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5 Credit Card Transactions That Are Just Like a Cash Advance


Cash advances are one of the most expensive types of credit card transactions. These transactions come with a higher interest rate and a cash advance fee. With most credit cards, you don't get a grace period to pay off the advance and avoid paying a fee. Most people think of a cash advance as using a credit card to get cash from an ATM. Your credit card issuer may treat other types of cash transactions as cash advances. These are known as cash equivalent transactions.

Overdraft protection. Connecting your credit card to your checking account to avoid overdraft transactions saves you from overdraft fees, but you'll still pay some form of a cash advance fee. The overdraft transaction will also have a higher interest rate. It may be better to use your credit card instead and avoid the extra fees.

Money orders, traveler's checks, wire transfers, or prepaid cards. Using your credit card for any type of payment that can be used for cash, is just like taking out a cash advance. Your credit card issuer may not warn you at the time of the transaction, so it's important to read through your credit card agreement to learn whether a transaction is a cash equivalent.

Credit card convenience checks. Credit card issuers may include these checks with your credit card billing statement to use at your convenience. Note that any transaction you make with a convenience check is essentially a cash advance. Use your credit card instead if the retailer accepts credit cards.

Foreign currency. When you're traveling in another country and need local currency, you may have the option of using your credit card to buy the currency. If your credit card issuer allows the transaction, it counts as a cash advance. You might also be charged a foreign transaction fee if your credit card charges one.

Casino chips and gambling. These are also considered cash advances. Don't bank on hitting in big and making enough money to pay off the balance. There's no guarantee you'll win.

If you're wondering whether a transaction might trigger a cash advance fee, give your credit card customer service a call. They can let you know whether you can expect an additional fee and higher interest rate for the transaction.

Note that the cash advance limit on your credit card may be lower than your actual credit limit. Because of this, the amount available for cash advances may be lower than what you have available for purchases. Check your account balance before the transaction to make sure the transaction won't put you over the credit limit.

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Comments 1

Wanderer on Saturday, 13 July 2019 03:18

The break out of what is a cash advance is useful. Seems it gets lost in the actual terms and conditions lenders include in the original card issue.

The break out of what is a cash advance is useful. Seems it gets lost in the actual terms and conditions lenders include in the original card issue.
Saturday, 13 April 2024

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