Are Cash Advances a Good Idea?

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The problem with cash advances
- Cash advance fee: As the name implies, this is a one-time fee charged when you take your advance, usually ranging from 3% to 5% of the amount. For example, if you take out a $200 cash advance, the fee of $6 to $10 will be tacked on to your account balance.
- Higher interest rate: Many cards charge a higher APR for cash advances than for regular purchases.
- No grace period: Your credit card usually gives you a grace period of at least 20 days to pay off your purchase before you’re charged interest. Cash advances, though, start to accrue interest from day one.
- Lower credit limit: Some credit cards have a separate cash advance credit limit, which is lower than the overall credit limit.

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What are some alternatives to a cash advance?
- Promotional offers from your card's issuer: In recent years, some credit card issuers have unveiled cheaper ways to tap into your credit line, including the option to turn your available credit into an installment loan without requiring a new loan application. You're still charged interest when you use this option, but you'll possibly get a more reasonable rate.
- An overdraft on your checking account: It may cost $25 to $35 if your account balance goes negative but you’ve authorized the bank to allow the withdrawal anyway. You can opt out of this, of course, but it is an option for short-term funds. Be careful, though — some banks also charge extended overdraft fees.
- An early withdrawal from a certificate of deposit (CD): This is another option if you need money right away. However, CDs are meant for long-term deposits, so you might face early withdrawal penalties or have your CD canceled.
- A personal loan: This alternative is typically more involved than the other options, as it involves you going to a bank and applying for the loan. Interest rates on 24-month personal loans are lower than that on most credit cards, but the rates on short-term loans from payday lenders are often much higher.

When does a cash advance make sense?
Even better: Avoid needing an advance
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