Taking a cash advance on your credit card is often a last resort. And it should be. Credit card cash advances are ridiculously expensive and, if you only pay the minimum on your credit card every month, can take years to pay off. If you’re already carrying a cash advance balance on one of your credit cards, you may want to consider doing a balance transfer to a new credit card with a 0% APR to reduce your interest expenses. However, if you are thinking about using your credit card for a cash advance, here are a few things that might persuade you to look elsewhere for cash:

Credit Card Cash Advances Carry High Transaction Fees

All major credit card companies charge cash advance fees. In the past, these fees were typically the greater of $5 or 3%. Today, most credit card companies charge four and five percent cash advance fees with a minimum of $10. Thus, if you take a $100 cash advance from your credit card, you’ll likely pay $10-a full 10% of the amount you’re borrowing.  On larger advances you’ll pay less percentage wise, but 5% is still a hefty upfront fee.

Cash Advance Interest Rates are Absurd

If you think the 15% interest rate your credit card company charges on your current balance is high, then you’re in for some rate shock. Most cash advance credit card interest rates exceed 20% and many are 24% or higher. This comes on top of the four to five percent fee you’ve already paid. Continue Reading »

Many people who are long time customers of Citibank might consider any Citi credit card to be the worst credit card of 2009.  However, the victims of the Citi interest rate increases are long-term customers.  People who became Citi credit card holders in the second half of this year are likely exempt from the rate increases, as Citi cards offered during the summer and early fall featured language stating that rates would not be changed until cards expired.

Overall, Citi may have proven to be the worst credit card company this year as hundreds of visitors have shared horror stories about interest rate increases of up to 29.99%.  And these are customers with good credit.  Despite these increases, there are worse credit cards than those offered by Citi.  So while I’d love to crown Citi the worst credit card company, the (dis)honor ultimately goes to First Premier Bank. Continue Reading »

Low rate balance transfer checks and their evil twins – cash advance checks – are often wolves cloaked in sheep’s clothing.  Despite the credit crunch, these checks are still showing up in mailboxes frequently, offering consumers low or 0% rates for three months to a year.  However, balance transfer checks and cash advance checks pose a number of issues for consumers that can prove quite costly.  This, of course, is the reason banks send them to us.

What brought these nasty credit card tools to my attention today was a horror story posted by a recent visitor.  She used a 0% cash advance check to pay down some high interest bills.  Unfortunately, the bank that mailed her the cash advance check decided to lower her credit limit before the check cleared.  This, in turn, caused her to bounce checks to two credit card companies and two utility companies, which will cause her interest rates to increase, cost her hundreds in bank fees, and may potentially damage her credit score. Continue Reading »