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- Managing Credit Cards & Payment Options
Credit Card Cash Advance Checks: Beware!
Ooh, it's so tempting! You're going through your junk mail and you see something from your credit card company, so you open it up. And there they are. Three checks, the top one of which has your name already on it and a large sum of money that you can cash. You don't even mean to start daydreaming but before you know it, you're thinking about the new lingerie, the home improvements or the theatre events that you can afford if you stick this in your account. You know better. But you want to do it anyway.
Credit card cash advance checks seem wonderful and convenient, giving you money that you didn't think you had so that you can pay this month's bills stress-free or treat yourself to something nice. But think for a second about the nature of a credit card company. Do you really think that the company just likes you so much that they're handing you free money to make your life easier? Hardly.
Credit card companies love cash advance checks because they encourage consumers to access credit card funds that they wouldn't have touched otherwise. The consumer (that's you!) spends more money on credit, increasing the total balance owed to the company and allowing more interest to accrue. And the cash advance check almost always comes with a fee, so you're actually paying money to be able to owe more money to your credit card company. Does that make any sense?
Cash advances can be great in times when you really need them. If there's a serious emergency and you need to access some money from your account, it might be worth paying the fee to get that extra cash. But that kind of cash advance can be done any time on most accounts, either by using your PIN to get the money out of an ATM machine at the needed time, having the advance done at a local bank or calling the credit card company and requesting the advance. Why am I telling you this? Because I know that sometimes you save those cash advance checks "just in case" you might "need" them before they expire ... then you find them when you're cleaning out your drawers and those daydreams start again.
Cash advance checks cause impulse buying. You end up spending money on items you don't need, paying fees to do it and then creating stress in your life because you suddenly have to pay back monthly installments that you hadn't anticipated when working out your budget. You know when you look at the junk mail envelopes that you're going to find those checks inside, so do what you need to do: toss them out!