Disadvantages of Cash Advances
and Credit Card Checks

Disadvantages of Cash Advances and Credit Card Checks

Credit card companies often offer enticing terms and conditions to get you to sign up for their cards and get you on their hook. But most people don't need to be baited, as they're eager to accept credit from whoever will offer it.  

For example, you may be allowed cash advances to withdraw cash from your bank account or an ATM. You may also receive credit card checks, an option you can use in addition to your credit cards. But it would be best if you used them sparingly, as there are significant reasons to limit or even avoid the use of these options altogether. Below are some of the more pertinent ones.   Return to Top

Sign of Financial Weakness

Using a credit card check or accepting cash advances implies that you need the money since you're not just using a credit card for convenience. This signals the credit card companies that you're someone who should be given a low credit limit, since you won't be able to clear any current debt anytime soon.  Return to Top

There are Heavy Usage Fees

When you use credit card checks, you often give up interest-free periods offered by credit card companies looking to make you a customer (which can be up to two months), meaning that you start paying interest on the money literally from the minute you spend it. To make things worse, most cards will also charge a fee each time you use cash advances, credit card checks, and ATMs.

These fees add up quickly but are entirely avoidable by simply not using the checks unless there is clear and compelling evidence that these type fees won't apply if you use them.  Return to Top

Be Wary of Hitting Advance Limits

You could eventually run into an advance limit if you become dependent on cash advances and credit card checks. Most credit card companies have limits on how much of your balance can be taken in cash advances and how much must be in purchases. So, to avoid inadvertently hitting these limits, be aware of them before you use cash advances heavily.  Return to Top

Try to Use Just your Credit Cards

Instead of using cash advances and credit card checks to pay for small things and ending up taking advances or using checks to pay for bigger things, attempt to do it the other way around. If you fall into a situation where you rely on advances, use your card for smaller items you wouldn't usually bother to charge. This way, you can avoid taking the advances and pay less interest. Be conscious about your spending, and spend wisely.

Further, there are fortunately very few bills now that must be paid by check, so you should be able to limit credit card checks to a minimum. If you're willing to call them up and wait in their queue for a while, you can get them to accept a credit card payment by giving them your credit card number.  Return to Top

Understand Credit Card Debt Repayment Systems

One more tricky thing about credit cards is their system for debt repayment. The system works so that your payments pay off the lowest interest money first, leaving your heavier interest debt intact until you fully pay off your card.   Return to Top

Related Pages you might like

The Right Credit Card - you can leave it to chance that you can get the best credit card deal or put in the work to make it happen. Check your credit · determine which type of credit card you need · narrow your choices by asking the right questions · apply for the card that offers you the highest overall value.

Top Reasons To Avoid Credit Cards - there is a tendency to underestimate what you spend using credit cards. Especially smaller amounts, until they sneak up on you and suddenly mushroom into colossal debt, leaving you wondering what you really get for the $5,000.00 balance you incurred.

Transfer Balances To Save Money - if you have high-interest credit card balances, it can be to your financial benefit to transfer them to lower interest cards to save money. And you wouldn't be alone, as most people in the US have more debt than they can manage. Transferring balances is legal, and you can take advantage of it as often as needed. Discover how to go about it.    Return to Top

Closing Remarks

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