Credit card cheques and cash advances

Using Credit card cheques and cash advances

You’ll find out you can do more with a credit card

once you’ve got it, than just pay for things with the card. For those times when you’re paying someone who can’t accept your card. You might be sent a credit card chequebook. You might also be offered cash advances – a way of withdrawing cash directly from your credit card, either from a cash machine or to your bank account. This is provided for when you need cash in an emergency. Here is why you really shouldn’t overuse either of these features.

1. You’ll pay more interest

With most cheques and cards advances are charged at a much higher rate of interest than normal spending. Sometimes there is an interest-free period up to two month you often give up. You start paying interest on the money literally from the first minute you spend the money. Most cards will also charge a fee each time you use credit card cheques or cash advances. Not only that, using an ATM may increase the fee even further.

2. It marks you out.

When you accept a cash advance or use a credit card cheque, you’re showing that you really need the money, you’re not just using a credit card for convenience. This marks you out in the credit card company’s records. It seems you are someone who shouldn’t be given a good deal. After all, you won’t be going anywhere.

3. Try to pay with the card instead.

Instead of finding you have to take advances or use cheques to pay for bigger things and using cash to pay for small things, often it’s better to do it the other way around. You should start using your card for smaller things where you wouldn’t usually bother, if you’re in a situation where you’re relying on advances, just to avoid taking the advances and paying more interest. Think strategic in how you are paying.
Remember that there aren’t many reasons to ever use credit card cheques, because there are very few bills now that must be paid for by cheque. If you’re willing to wait in their queue for a while and call them up. Just by you reading the number the chances are you can get them to accept a credit card payment.

4. Look out for advance limits.

Sooner or later, if you start relying on cash advances, you’ll probably run into an advance limit. Try to find out these limits before you start taking advances. Many of credit card companies have limits on how much of your balance must be in purchases and how much can be cash advances. They don’t advertise it.

5. Remember they get left for last.

Most companies will put your payments towards the lowest-interest money first, that means your purchases, when you pay back your credit card debt, and then towards other lending. That means until you get your balance all the way down to zero you keep paying that high interest on the cash advance or cheque.