Comments on: Are Credit Card Cash Advances Ever a Good Idea?

By: Allison

Allison — Tue, 21 Apr 2009 00:15:31 +0000

Hi Everyone! So my boyfriend wants to invest in a gas station with some business partners. He needs about 10,000 dollars for a deposit. He has been trying to get a personal loan for the money, but has not had any luck yet. He just got an offer from Bank of America for a promotional .99% interest rate for 1 year on a cash advance. I was always taught to NEVER take a cash advance on a credit card, but he is running out of options. Since this money is for a business investment, is this one instance where a cash advance is a feasible option?

Please help!

By: Jennifer @ Money Saver 101

Jennifer @ Money Saver 101 — Sun, 05 Apr 2009 03:41:23 +0000

I used a credit card for a cash advance while in Romania. It was a horrible idea! It seemed like a great idea at the time, but a year or two later, I finally paid for those finance charges. I thought my credit card was paid off, and then it wasn’t. Surprise!! I say have some money in the bank and use that for emergencies. You don’t want to pay back that sudden emergency for the rest of your natural life.

By: Midnight

Midnight — Sat, 04 Apr 2009 18:09:35 +0000

I think its a horrible idea. My bookie charges a lower interest rate. Heave you seen these rates?? they have hit 40% and above

By: MoneyEnergy

MoneyEnergy — Thu, 02 Apr 2009 16:05:55 +0000

Ann, good point about the currency conversion costs when using the cards overseas. Though if it’s the only option, better than having none.

TAM, that’s great. I have to say I agree with that approach and I probably won’t be doing any cash advances again!

MoneyMatters, I’m glad to hear you also would rather never use credit cards at all… I think it’s a good goal to aim for.

By: Ann

Ann — Thu, 02 Apr 2009 07:36:04 +0000

I think my husband’s thoughts are that since his card is issued from a non-US bank, therefore the terms are totally different. Ok that can and is true to a certain extent in the sense that the country of origin of the credit card may have different laws regulating the banks. But at the end of the day, the bank is going to make big time money whenever a person takes a cash advance.

Forgot to mention earlier, one cannot forget also about if a person uses their credit card in a foreign country, whether for a purchase or cash advance, visa/master tacks on a fee for the currency conversion which is included in the total amount of the charge. Meaning you will never see a separate charge labeled “currency conversion charge”.

By: The Almost Millionaire

The Almost Millionaire — Wed, 01 Apr 2009 21:36:00 +0000

In all my 15 years as a credit card using consumer, I’ve NEVER utilized the cash advance feature. That is money that is just too expensive. I’d rather borrow from a friend and pay them the interest!

By: Rick Vaughn

Rick Vaughn — Wed, 01 Apr 2009 15:23:12 +0000

Money,

Not to mention the interest on cash advance is 5% higher on most cards. This is a trap certainly best avoided!

By: Bible Money Matters

Bible Money Matters — Wed, 01 Apr 2009 14:47:24 +0000

Thanks for the link!

I don’t really think getting a cash advance from a credit card is ever a “good idea”, I can certainly see how someone might get into a situation and feel trapped and feel like it was their only option.

Personally, I like to plan ahead, and keep an emergency fund large enough so i don’t have to worry about the little “emergencies” that pop up. Because I know it IS a good idea to not use credit cards if you can.

By: MoneyEnergy

MoneyEnergy — Wed, 01 Apr 2009 14:15:19 +0000

Ann, I forgot about the one-time transaction fees that might be added to the bill! Even better reason not to use it. Not sure why your husb. thinks using it in a foreign country is going to be any different, or using a card from a foreign bank.

Tom, the past is definitely no sign of the future, as all economists learned over the last 8 months…they threw their textbooks out the window.

By: tom

tom — Wed, 01 Apr 2009 12:51:42 +0000

Clare, thanks for the link to my site.

And I do hope your readers will understand that with investing, it is not all peachy. Past performance is not a good indicator for the future yet this is the tactic some of these so called advisor’s use to sell you the product.

And i would say, borrowing money for anything that is not guaranteed to make you more money, then don’t do it.
Instead save up the money and then go ahead and invest with it but be open to the possibility of losing it only because you are not as familiar with investing.