Many stores may accept only cash. There may be other situations why you may need cash. Many of you may run to the ATM machines to get cash using your credit cards. It may seem favorable to you because of easy access to cash, in fact, it is not. Here are some reasons why you should not use your credit card to get cash:
- No grace period: If you use credit card to buy something, you do not pay any interest if you pay off balance in your statement. However, interest starts to accrue on the cash from the moment the cash advance transaction is completed. This means you do not get any grace period for paying off the credit that you use without paying extra money.
- High interest rate: Almost all the credit cards charge different interest rates on purchases and on cash advances. The interest on the cash advance is much higher than that of regular purchases.
- Extra fee: In general, you will have to pay a fee to get cash advance. The amount of fee will depend on the credit card you use. Many banks charge about 2% of the cash advance. Some banks may change a fixed amount such as 10, 15 or 20 dollars for each cash advance transaction.
As you can see cash advances will cost you a lot of money. It is recommended that you use debit card instead of cash advance from credit card. Better yet, keep some cash in your pocket in case you need it. Use cash advance when you do not have any other sources of getting cash.