[aageneral] Convenience Can Be Costly - Understanding Cash Advances

Please consider this free-reprint article written by: James
Dimmitt

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Article Title: Convenience Can Be Costly - Understanding Cash
Advances
Author: James Dimmitt
Category: Finances
Word Count: 412
Article URL: http://www.isnare.com/?id=2685&ca=Finances
Format: 64cpl
Author's Email Address: jimdim815@aol.com
Article Source: http://www.isnare.com
Online Publisher Tool: http://www.isnare.com/html.php?id=2685

------------------ ARTICLE START ------------------
You’ve just opened your credit card bill and attached to your
statement you find a “convenience check” included. It may
already be filled out with a dollar amount such as $300, $500,
or even $1,000. Your mind fills with ideas of what you could
buy with this “instant” money. A new summer wardrobe, a nice
dinner and tickets to a concert, a weekend getaway.

But before you go off on a shopping spree, you should be aware
that your “convenience check” is nothing more than a cash
advance on your credit card. Cash advances on credit cards
carry many extra fees, often overlooked or misunderstood by
consumers.

Here’s a quick look at the types of fees most card issuers
charge for a cash advance:

1) Upfront fee of 2-4% of the amount advanced. On a $1,000
cash advance your fee will range from $20-$40 in addition to
the interest charges.

2) Higher interest rate than on purchases. Many credit card
companies charge 18% or more on cash advances. In addition,
most companies apply only a small percentage of your monthly
minimum payment toward the cash advance.

Some require that you pay down the balance on your purchases
first before applying payments to the higher-interest advance.
In other words, you’ll be paying fees and interest on your cash
advance for a long time, especially if you only pay the minimum
payment.

3) Cash advances normally carry no grace period. This means
interest charges accrue as soon as you withdraw money or cash
the convenience check.

By law your credit card company must disclose any fees
associated with a cash advance. The easiest way to find out
what fees are charged is to carefully read your credit card
statement or to call your credit issuer’s toll-free customer
service number and ask questions.

Credit card companies charge these fees for two main reasons.
One, to cover the costs to process this transaction which are
often higher than a regular credit card purchase. And secondly
because of the percentage of defaults among credit advance
users. These costs are then passed along to you the consumer
in the fees and interest rates associated with a cash advance.

The next time you are tempted to cash that convenience check or
withdraw money from an ATM using your credit card, be sure you
understand the fees and long term effects of using a credit
card cash advance.

About The Author: © 2005,
http://www.yourfreecreditreportnow.com Author: James H. Dimmitt
James is editor of “To Your Credit” a FREE weekly newsletter
focusing on managing your personal finances and credit.
Subscribe and get a FREE copy of your credit report when you
visit: http://www.yourfreecreditreportnow.com
------------------ ARTICLE END ------------------

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