Credit card companies mail out millions of credit card cash advance checks each year, hoping to entice consumers into giving themselves a high-interest, high-fee loan. See how cash advance checks work, and how they differ from other sources of credit like a balance transfer check.

Credit Card Cash Advances

A credit card cash advance is a simple way to turn a credit card limit into an immediately available supply of cash. When you fill out a credit card cash advance check and cash it in your own name, the money is deposited into your bank account.

Here’s how it works:

  1. Cash the check – After writing the check to yourself, you can take the check to the bank and deposit it into your own account. The money should be available immediately as funds are drawn from the “cash advance” portion of your credit line.
  2. Fees are added – The fee is added to the amount of the check and the total is then charged to your account. The fee does not come out of the amount that you deposit into the bank by check. The fee can be as high as 3-5% of the total cash advance or $5-10, whichever is greater.
  3. Interest collects – Immediately after the check is cashed, interest will begin to accrue on your account. This is very different from balance transfers and purchase checks, which have the same grace period as any other transaction. There is no grace period for cash advances however.

Using a cash advance

Never borrow more than you need from a high-interest source like a cash advance. Between the extra fees and above-average interest rates, the balance will compound quickly. Be sure to pay off the balance in full as quickly as you can to avoid as much interest as possible.

Similar Posts:

Comments are closed.

Get free updates...

RSS Feed