|
Credit Card Cheques and Cash
Advances
Once you’ve got a credit card, you’ll find that you can do more
with it than just pay for things with the card. You might be
sent a credit card chequebook, for those times when you’re
paying someone who can’t accept your card.
You might also be offered cash advances – a way of withdrawing
cash directly from your credit card, either to your bank
account or from a cash machine. This is designed for when you
need cash in an emergency. You really shouldn’t overuse either
of these features, and here’s why.
You Pay More Interest
With most cards, cheques and advances are charged at a much
higher rate of interest than normal spending. You often give up
any interest-free period (which can be up to two months),
meaning that you start paying interest on the money literally
from the minute you spend the money. Not only that, but most
cards will also charge a fee each time you use cash advances or
credit card cheques – and using an ATM may increase the fee
even further.
It Marks You Out
When you use a credit card cheque or accept a cash advance,
you’re showing that you’re not just using a credit card for
convenience – you really need the money. This marks you out in
the credit card company’s records as someone who shouldn’t be
given a good deal. After all, you won’t be going
anywhere.
Try to Spend With the Card Instead
Instead of using cash to pay for small things and finding you
have to take advances or use cheques to pay for bigger things,
it’s better to do it the other way around. If you’re in a
situation where you’re relying on advances, you should start
using your card for smaller things where you wouldn’t usually
bother, just to avoid taking the advances and paying more
interest. Be strategic in how you spend.
Remember that there are very few bills now that must be paid
for by cheque, so there aren’t many reasons to ever use credit
card cheques. If you’re willing to call them up and wait in
their queue for a while, the chances are you can get them to
accept a credit card payment just by you reading the
number.
Look Out for Advance Limits
If you start relying on cash advances, sooner or later you’ll
probably run into an advance limit. The credit card companies
don’t advertise it, but many of them have limits on how much of
your balance can be cash advances and how much must be in
purchases. Try to find out these limits before you start taking
advances.
Remember They Get Left For Last
When you pay back your credit card debt, most lenders will put
your payments towards the lowest-interest money (your
purchases) first, and then towards other lending. That means
that you keep paying that high interest on the cash advance or
cheque until you get your balance all the way down to
zero.
| 
Delicious
Google Bookmarks
Stumbleupon
Digg
BlinkList
Ma.gnolia
Reddit
Yahoo My Web