Convenience Can Be Costly
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.
© 2004, www.yourfreecreditreportnow.com
Author: James H. Dimmitt - James is editor of "TO YOUR CREDIT", a weekly free newsletter. Subscribe to the newsletter by visiting
http://www.yourfreecreditreportnow.com.
Latest News
Security Service acquires Colorado credit union Bizjournals.com Security Service Federal Credit Union, which has been steadily growing its Colorado presence in recent years, has acquired another credit union in the ... Security Service acquires Colorado credit union Texas credit union acquires Norbel Credit Union in Texas buys Colo.'s Norbel |
 Live Trading News | CREDIT MARKETS: Few Issues Cap Busy Week For Corporate Bonds Wall Street Journal In high-yield, Ford Motor Credit Corp.'s 7-year notes sold on Wednesday were similarly oversubscribed. Even secondary trading volumes have picked up since ... CREDIT MARKETS: Tepid Auction, Refi Fears Dominate Trading Analysis: Equity 'volatility' vs credit market, what to believe? Stock Index Futures or Treasuries? |
 This is Money | The New Credit-Card Tricks Wall Street Journal The Credit Card Accountability Responsibility and Disclosure Act of 2009, known as the Card Act, was intended to reshape the contours of consumer finance. ... Should you carry multiple credit cards? How to Safely Build Credit What is a merchant supposed to do when a credit card is left at his or her ... |
 Christian Science Monitor | Lessons from my worst money blunders: credit card emergency fund Christian Science Monitor Depending on credit cards for emergencies can land you deep into debt quickly. Putting just a little bit away each month instead could save you from ... What Credit Cards Cost the Poor Use Balance Transfers to Reduce Credit Card Debt, Says SmartBalanceTransfers.com 4 Common Fees and How to Avoid Them |
MDC Holdings 2Q Loss Narrows, Helped By Tax Credit; Orders Up Wall Street Journal Outside of orders, home builders have seen better results in recent quarters, helped by the federal government's tax credit given to first-time home buyers. ... M.D.C. Holdings Announces Second Quarter 2010 Results Homebuilder MDC Holdings trims 2Q loss Homebuilder MDC Holdings narrows loss in Q2 as closings soar 71% |
 Los Angeles Times | Desperate for capital, small businesses turn to private lenders Los Angeles Times These private lenders say they're supporting small businesses at a time when credit is scarce, providing loans that help borrowers fix their credit scores ... |
 TheStreet.com | S&P upgrades Invesco credit ratings BusinessWeek Standard & Poor's raised investment-grade credit ratings for Invesco Holding Co. Ltd. on Wednesday, citing the investment manager's recent performance ... S&P says may cut AT&T's credit rating by one notch AT&T Placed on Credit Watch Negative AT&T's corporate credit rating falters |
 Sandusky Register | Cedar Fair gains new credit line, loan package Toledo Blade The deal with KeyBank, Wells Fargo Bank, UBS Loan Finance, Fifth Third Bank, and Sumitomo Mitsui Banking Corp. gives Cedar Fair a revolving credit line of ... Cedar Fair Completes Refinancing of Senior Secured Credit Facilities Cedar Fair Completes Issuance of $405 Million of Senior Unsecured Notes Cedar Fair completes refinancing of its debt |
US CREDIT-Lincoln National bonds attractive after earnings Reuters N) bonds may be a safe bet as the insurer enhances its liquidity, sees positive credit ratings actions and pays off its obligations to the US government. ... |
 Chattanooga Times Free Press | Man robs TVA credit union, FBI searches for suspect WVLT (WVLT) - The FBI is on the trail of a bank robber who hit the TVA Employees Credit Union on Chapman Highway this morning. Witnesses say the man came in with ... News release: Authorities searching for suspect who robbed the TVA Employees ... Authorities searching for man who robbed bank on Chapman Highway Skull-and-crossbones robber heists Chapman Highway bank |
Resources
-
Bad Credit Loans, Bad Credit Credit Cards - YoureApproved.org!
Personal loans, Credit cards from bad Credit lenders including bad Credit loans - high risk unsecured bad Credit cards - debt consolidation loans - payday loans!
-
Bad Credit Loans - Personal Loans - Credit Cards - Home Loans - Auto Loans - Credit Repair
Bad Credit loans and Credit cards - personal loans - high risk loans - Credit repair - free government grants - government auctions - police auctions - debt consolidation - filing bankruptcy
-
No Money Down - Creative Real Estate Investing!
Learn how to control real estate Without Credit checks and no money down! You can Buy With No Credit!
-
Pass Your Class - Pass Your Clep Tests - Guaranteed!
Pass your CLEP tests - Guaranteed! Pass or Pay Nothing. 98% of all students that study our materials PASS!
-
Debt Elimination that Works: Remove All Your Debt, including Credit Cards and Mortgage in 3 to 5 yea
Debt Elimination that Works: Remove All Your Debt, including Credit Cards and Mortgage in 3 to 5 years.
-
Access Loan.
15,000 Cash Loan - Even With Credit Problems.
-
Credit Repair in 1-3 Months!
Credit Repair - Repair bad Credit within 1-3 Months.
-
Profit in Real Estate Without Cash, Credit or Risk!
Profit in real estate without cash, Credit or risk. Learn how to make quick cash in real estate without owning property.
-
Repair Credit Reports
A Downloadable Credit Repair Guide Aff. Make 50% Comm.
-
Credit Repair
Great seller quick turn around. High payout.