Cash Advances Laden With High Interest Rates, No Grace Period
May 22, 2024
By: Mike Dautner
Credit card cash advances turns out to be an expensive way to borrow money, based on new findings from CreditCards.com survey of 100 cards’ cash advance terms.
On average, a cash advance APR is 23.68 percent, way higher than the average purchase APR of 15.79 percent.
Beyond that, none of the cards offer a grace period for cash advance transactions like they do for traditional credit card purchases, meaning borrowers instantly start accruing interest.
For example, if someone makes a purchase on an item that costs $1,000 on a credit card with a 15.79 percent rate and pays it off in 30 days, they’ll pay zero interest as per the arrangement with the grace period.
However, a $1,000 cash advance under the typical terms found in the survey will cost an extra $69.73,
This includes the $50 upfront fee, plus $19.73 for 30 days’ interest at 23.86 percent.
To check out this report in more detail, visit https://www.creditcards.com/
Cash advances are not just ATM and convenience check transactions, either. Consumers should note that wire transfers, money orders, legal gambling purchases and bail bonds are often treated as cash advances if paid via credit card.
“If a cash advance is the best of a bunch of bad options, be sure to pay it off as quickly as possible making more than the minimum payment, since interest starts building up the moment you access the cash,” said Matt Schulz, CreditCards.com’s senior industry analyst. “This can wind up costing you hundreds of dollars if you’re not mindful.”
