Cash from a credit card?

[dracoi]

@Wallydraigle

Don’t EVER take out a cash advance from your credit card. I did it one time in an emergency, and I’d literally rather sell bone marrow or something than do that again.

A credit card cash advance is probably better terms than a payday loan. Cash advances, even with fees to withdraw the money are generally in the 30-40% APR range. Payday loans can be in the 400% APR range (per the FTC).

Of course, both options are designed to bleed you dry and generally make financial problems worth rather than better. Bone marrow is probably the best option

[zombywoof]

Apparently (from what I heard on a recent podcast of NPR’s “Planet Money”) until recently you used to be able to order Presidential dollar coins from the US Mint by credit card, this would have been a way to get cash without doing a “cash advance”.

(They stopped allowing such purchases by credit card because a people were regularly buying hundreds or thousands of dollars in coins using credit cards that award frequent flier points for dollars spent, then just depositing them in the bank and paying off their bill.)

[Ograbme]

Why to banks do the higher/immediate interest thing for cash?

[Mama_Zappa]

@Ograbme

Why to banks do the higher/immediate interest thing for cash?

1. because they can
2. because they’re not collecting merchant fees for the cash like they would if you made a purchase: if you spend 200 dollars at Wal-Mart, the bank gets several dollars from Wal-Mart. If you get a 200 dollar cash advance, the bank would get nothing otherwise.

@pulykamell

…Fourth, many banks require you to pay down your purchases first before paying off your cash advance. This means the higher interest on your cash advance will keep accruing until you pay off your purchases completely and only then will you make a dent in the cash portion of your debt..

With the recent credit card reform act, payments in excess of the minimum now go to the highest-rate debt, which is a change that will (hopefully) help those folks who were stuck in “can’t pay down” hell because of the way payments were formerly applied.

[Canadjun]

@Ograbme

Why to banks do the higher/immediate interest thing for cash?

Probably less important than the reasons mentioned above, but if interest was not charged on cash advances immediately, you could postpone paying your cards off forever - pay off credit card A with an advance from credit card B; wait a few days; pay off credit card B with an advance from credit card A; wait a few days days; repeat ad infinitum. That strategy doesn’t work if interest on cash advances accrues immediately.