I got a cash advance from my credit card to purchase a used computer for my children. The computer is busted and my credit card payments are out of control. What can I do?
Christina Washington – Pickering, ON
Not only are cash advance rates significantly higher than your standard APR, they also accrue interest immediately from the date of the advance – there is no grace period associated with cash advances. Further, often times an issuer will asses a onetime fee for the advance. This can either be a flat rate or a percentage (up to 5%) of the advance amount.
Finally, certain ‘sneaky’ creditors will first apply your payments to the lower interest balances. In doing so, they keep your high interest cash advances outstanding as long as possible, thus, generating the maximum profit from you. In order to reduce these high-interest loans, you must first pay off your lower interest rate balances in full.
All this amounts to one important rule – cash advances are a VERY expensive form of loan and should be avoided completely. Regarding your busted computer, unfortunately, that relates to the other side of the Brain!