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.

---

How to Order the Right Credit Reports to Repair Your Own Credit

In this week's article, I am going to offer some... Read More

Choosing The Credit Card That Is Right For You

Credit cards represent an important part of our financial lives.... Read More

Good Credit Is Not A Good Reason To Borrow More Money After Youve Achieved Financial Freedom

The most important thing for you to remember is that... Read More

New Credit Advice: Dont Pay off Those Credit Cards!

Credit needed for real estate mortgage financing differs from credit... Read More

Dealing With and Repairing Bad Credit

Bad credit can be a burden for otherwise good credit.... Read More

Building Your Credit History

Today, credit is an indispensable part of our lives. In... Read More

Good Credit is King, When Qualifying for Mortgage Programs

If you want to purchase a new home or refinance... Read More

Credit Establishment 101

There will come a day when you need credit. You... Read More

Online, Phone, U.S. Mail or In-Person: Where is Your Credit Card and Personal Identify Safest?

Identity theft is the fastest growing crime according to the... Read More

Stop Credit Card Offers

You can stop receiving credit card offers in the mail!... Read More

Rebuild & Keep Good Credit Ratings by Understanding Your Credit Cards

Secured Credit Card is similar to a prepaid credit card... Read More

Credit Score: The Brightest Feather In Your Financial Cap

Credit scores are the most important aspect that determines your... Read More

Two Things You Need To Know About Prepaid Debit Cards

According to the September 2004 issue of the Nilson Report,... Read More

Learn The Truth About Identity Theft

Identity theft is the fastest growing crime in America, according... Read More

Balance Transfers Can Help You Stop Putting Money Down The Drain!

As you probably know, interest rates are at all time... Read More

Why Credit Cards are a Bad Idea

Credit cards are just so convenient, aren't they? There's no... Read More

Credit Card Debt: How To Control It

A lot of people spend more money than they can... Read More

Credit Report ? Look Out for Your Debit Report, Too

Most consumers are aware that there are companies that keep... Read More

Sound Advice For First Time Credit Card Users

If you are just entering the world of credit cards,... Read More

The Next Person With Credit Problems Got Their First Credit Card Today!

One of the focus areas of my information is the... Read More

4 Steps You Can Take If Your Online Credit Card Application Has Been Refused

Help! I've Been Turned DownYou received an envelope in the... Read More

Maximizing Credit Card Rewards

In their quest to get you to sign up for... Read More

Finding and Applying for the Right Credit Card Offer Online

Anywhere you go online nowadays, you will see a multitude... Read More

Simple Identity Theft Protection

How many of you bank, shop, or transact other business... Read More

Reward Credit Cards: Get the Best Rewards Card Incentive Program

A good credit reward card can contribute to your retirement... Read More