Fraud Tip of the Day - December 2

Credit card cash advances aren't worth the cost

Times may be tough but using your credit card for a cash advance is a decision that can come back to haunt you.

This tip of the day is devoted to the subject of credit card cash advance loans. They're so easy to get and sometimes the temptation can be difficult to resist. If you're out shopping this Holiday season and feel tempted to take one of these loans out think again. Credit card cash advances are made at ridiculous interest rates. Your credit card's annual interest rate may be 12%, but you could end up paying 20 - 28% for a cash advance.

No Grace Period

To make matters worse, there's no grace period that allowing you to pay off the loan before interest is charged. This means that the meter starts running the second you withdraw the funds. If we haven't talked you out of it yet, consider that most banks tack on an additional transaction fee amounting to 3% of the total cash advanced.

Look Elsewhere for Loans

If you need the cash that badly, look elsewhere for it. Raid your savings, tap home equity, borrow from friends and family or apply for a good, old-fashioned bank loan at reasonable rates. A credit card may look like a debit card but it's hardly the same thing. Be aware that the bank is going to charge you an arm and a leg for the pleasure of borrowing a few bucks.

Read the Fine Print

The final decision of whether to use a credit card cash advance rests with you, but make sure you read all the fine print and are aware of what that cash advance is going to cost you in the long run before you decide to go for it.