how do credit card cash advances work?
im not the best person to be dealing with money so please help me out
i just took out 4 cash advances on 4 different cards to buy a car.
it was an impulse buy.
now i know interest will accrue each month, so do i just go on each month paying off the card as i usually do?
or do i pay the cash advance off seperately? how exactly does this work, THANKS!
first of all, you should have just gotten a car loan off a bank, i believe the interest rate is way cheaper.
you should be paying off your card bills as usual but on top of that you’ll be paying a separate fee for doing cash advances. contact your bank to know how much would the fee be.
The credit card companies are run by conservative capitalist loan-sharking pigs. They have one rate for purchases and a much higher one for cash advances. They’re the ones who decide where your payments get applied, and usually, the lower-interest part of your balance is paid off first, so they can keep charging you the maximum interest. Don’t even bother writing to your so-called “representative” in Congress, because even Democrats are on the take from banks, which is why the Moral Bankruptcy bill got passed. Capitalism *****!
Your banks will charge you a fee 2-3%, just to do the cash advances.
Depending on the interest rate that is offered on the cash advances (sometimes it’s at a lower rate), your monthly payments may go towards the cash advance, or it may go towards new purchases. Cash advance or purchase, you just make one payment on each card.
I’m guessing that you didn’t think you’d qualify for a regular loan, or you were buying this from a private owner.
Go to your bank and see if they will loan you the money at a lower rate than those on the credit card. If they will, pay off the cards immediately.
If not, your best plan is to figure out which card has the smallest interest rate and try to pay off the other cards first.
I think we’ve all made financially unwise moves and then spend the rest of our lives playing catch up.
Good luck to you.
oh wow! that was quite an impulse. where here we go. a cash advance is not much different from a usual purchase. when you buy lets say an ipod with your credit card then its like you’re getting a small loan from your credit card company and then you simply pay back the credit card company. usually the same interest applies. know every credit card company makes their money off of the interest that you pay back on each purchase thats why the minimum payment you can pay back on any purchase is only really interest. that way you keep buiding interest on the money you owe and your not evey paying down what you owe. thats how they get you. in case you didnt get it here is an example. ipod cost 300 dollars. you buy it with a credit card. and your interest is x%. every month those 300 hundred dollars accumulate 320 dollars of interest. so then you owe the credit card company 320 instead of just 300. they let you pay a minimum of 20 dollars. that way the interest can keep accumulating you dont pay off your debt and they keep making money. so this is the best way to go about it. i would imagine you most likely made each cash outs evenly. so check with each company to see which companies have the highest interest rates. and pay off the highest interest rate credit card accounts first. hope i helped
Most credit cards have a minimum Finance Charge for getting a cash advance…eg $10 …Then there is the interest rate. MOST card issuers charge a significantly HIGHER interest rate for Cash Adv. Therefore, you would be paying the Finance Charge, then the interest would most likely be applied to the lowest interest rate charges (purchases).This means that your cash advance would carry over from month to month accruing high interest.
The good news is…
now that you’ve had time to think about it, you can now start shopping for a car loan. I’d consolidate all those cash advances into one car loan…withlower interest. You’d only have to worry about 1 payment instead of 4.
Alternatively, you could transfer your balances all to one credit card with a 0% or very low introductory rate for 6 months+, that doesn’t get too high when it re-adjusts. That way, you are paying 0% for a few months while you figure out your next move: Here’s a great and easy place to apply for Cards with a 0% or LOW intro rate:
Cash advances on CC is dangerous. You pay higher fees and interest. When you make your monthly payment, the CC company decides how much to pay towards the cash advance and in most cases it is only pennies on the dollar, example:
You have purchases of $500
Cash advance $2000
Your payment to them is $200
They will apply most of the payment towards the purchases and little on the cash advance. Also check your statement you will find the monthly interest is higher on advances then on purchases. This is one reason why you shouldn’t use those “checks” they include in your statement. Once cashed, they are treated as cash advances.
Your best bet is seeing how you paid for the vehicle, then you own it. Find out the current book value (NADA). If the value is higher than what you owe on credit cards, try and use the title for a secured loan at a credit union then pay off the cards right away, you will save a ton of $ in interest.
Hope this helps
Consolidate those 4 cards into one loan by refinance them at a credit union, at your bank or on 1 very low interest card.