Cash ad­vance? Think ahead

That ser­vice from credit cards is best kept as a last re­sort. Fees and in­ter­est rates can add up quickly.

Los Angeles Times - - TRAVEL - By Catharine Hamm

You’re on va­ca­tion and get­ting ready to use your credit card for a cash ad­vance.

Stop right there and ask your­self whether it’s an emer­gency that can be re­solved another way.

That’s be­cause the fees and in­ter­est rates charged on such ad­vances can add up, said Matt Schulz, se­nior in­dus­try an­a­lyst at Cred­itCards.com, on­line mar­ket­place for credit cards.

Us­ing a credit card abroad for pur­chases can in­cur a for­eign trans­ac­tion fee, which can add 5% or more to your pur­chase. Alist of those card­scan­be­foun­datCred­itCard.com’s site, www.lat.ms/1cxWt6b, and at Nerd Wal­let’s site, www.lat.ms/14YpGiV.

Not ev­ery trans­ac­tion can be han­dled with a credit card, an­dif you’re out of cash and don’t, for some rea­son, have ad ebit car­don you, you may be tempted to use the cash ad­vance fea­ture.

“A cash ad­vance is ba­si­cally just us­ing your credit card to with­draw money from an ATM,” said Schulz, whose com­pany re­leased a report Wed­nes­day on cash ad­vance cards ( www.lat.ms/1dMBOwK ). “That’s the most typ­i­cal ex­am­ple of when some­one would do a cash ad­vance.”

But, he added, “That comes with fees, and it comes with a high in­ter­est rate, and those two things gen­er­ally make it a pretty bad choice for some­body un­der nor­mal cir­cum­stances.”

Howhigh? Some cash ad­vances charge 23.5% in­ter­est — “8.5% higher than the av­er­age credit card, which is 15%,” Schulz said, “a big dif­fer­ence.” The report said First Premier Bank charged 36% on ad­vances.

The other catch: In­ter­est be­gins ac­cru­ing im­me­di­ately, un­like a reg­u­lar credit card pur­chase in which you gen­er­ally have a grace pe­riod, de­pend­ing on the terms of the card. Be­cause you won’t be home, you may not think to pay it off im­me­di­ately.

All in all, a cash ad­vance isn’t your best fi­nan­cial move un­less cir­cum­stances war­rant. We of­ten urge peo­ple to carry sev­eral fi­nan­cial tools when trav­el­ing, but that ought to be the last one you take out of that tool chest.

travel@la­times.com

Martin Meiss­ner As­so­ci­ated Press

US­ING CREDIT CARDS is of­ten help­ful in travel, but be care­ful about us­ing them for cash ad­vances.

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