When you're in a pinch and need cash, a credit card cash advance may seem like a tempting option. But in most cases, it's a terrible idea. A cash advance is a short-term loan on your card account that can have very costly consequences. It begins to accrue interest from the day the advance is withdrawn, creating a larger debt than you started with.
Most of the time, cash advances are expensive and should only be used if you really need them. They don't directly affect your credit score, but they can hurt it indirectly if you raise your credit utilization ratio too high. This ratio reflects the amount of your available revolving credit you are using and should not exceed 30%. In case of emergency, a cash advance is certainly a better way to get money than a payday loan.
If you know there is a cash advance in the future, consider a credit card that offers 3% cash advances, such as the Capital One Venture card, instead of those that charge 5%. You may also want to check for debit cards that don't have ATM fees if you forgot to bring cash. Getting a cash advance doesn't have a direct impact on your credit or credit rating, but it can affect you indirectly in several ways. If you've lost a source of income or can't pay your bills for some reason, the opportunity to request a cash advance on your credit card might also seem like a viable option. In most cases, credit card cash advances do not qualify for introductory offers with no interest or low interest rates.
Free of charge and with a lower APR than the industry standard for cash advances, this card will make a cash advance much less burdensome. Overall, cash advances are expensive and should only be used if you really need them. If you consider cash advances solely because you forgot to bring cash, you may want to check for debit cards that don't have ATM fees. Along with separate interest rates, credit card cash advances have a separate balance from credit purchases, but the monthly payment can be applied to both balances.
