Watch out for these hidden cash advance fees for credit cards

Watch out for these hidden cash advance fees for credit cards

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Credit cards are a great way to manage your expenses, provided you use them carefully. Get it wrong, and you might run into debt and ruin your credit.

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There is also another, lesser known, danger…


If you’re not careful, you can quickly start charging extra hidden fees without realizing what you’re doing. One of the most expensive and confusing is the cash advance. This makes many people stand out because they don’t know what it is. Others know it, but don’t realize when it applies.

So what is a cash advance?

Users usually pay the cash advance fee when withdrawing cash from their credit cards.

Despite the danger, half of us don’t even realize that ATM withdrawals come with a cost, according to new research from credit experts TotallyMoney.

Direct interest

The cash advance fee is charged as a percentage of the amount spent on the card in the transaction. This percentage is usually 3%, with a minimum of £3. So if you quickly withdraw a tenner to help you out, you can pay a fee equal to 30% of your withdrawal.

The cash advance fee applies even if you have an introductory credit card that doesn’t charge interest on new purchases.

The other downside to withdrawing cash from your credit card is that you don’t take advantage of the typical 55 days interest-free on purchases, but start paying your card’s APR the moment you get those notes in your hand.

So only use your credit card in an emergency at an ATM. Stick to your debit card as much as possible.

Could you be rewarded for your daily expenses?

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It’s just not clear

Even fewer people realize that you can pay an advance for other transactions, for example when buying foreign currency at a bank or exchange office.

A cash advance is often charged even if you take out one of those brilliant travel credit cards with no usage costs abroad. They can waive all fees for foreign purchases, but the majority still impose a cash advance fee on cash withdrawals and also charge interest immediately.

You can also get caught doing other trades…

It’s a gamble

If you like a flutter, the cash advance can come at the expense of any winnings. If you are crazy enough to gamble online, your wagering will involve a cash advance. That also applies to a lottery ticket, including online versions. Oddly enough, even a fantasy football team entry fee is classified as gambling.

Most incredible of all, buying a gift card is considered a transaction equivalent to cash.

In any case, you also immediately start paying the APR of your card.

More cons

It’s also worth noting that cash advances are generally exempt from compensation plans.

More importantly, advances can show up in your credit history. If lenders see you regularly withdrawing money with a credit card, they will suspect that you have bad money habits and may be reluctant to give you a mortgage, loan or new card.

Do your research

Cash advance fees should be easy to avoid, either by paying with a debit card or cash, whichever is most convenient.

Publishers should do more to make customers aware of extra charges, but in the meantime you have to figure it out for yourself. Check your credit card statements every month; you might be shocked by what you find.

How These 5 Credit Card ‘Must-Knows’ Can Help You…

We all know that a bad credit history makes it difficult to borrow money – but did you know that improving your credit score can also help you get lower interest rates on credit cards, saving you hard-earned cash?

Find out how to improve your credit score and your chances of applying for credit with our free report “5 things to know before applying for a credit card”.

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