Good News, Credit Card Users Have Stopped Making This Mistake
Cardholders are saving thousands of dollars in fees. Woo-hoo!
Credit cards play a big part in nearly 170 million American consumers’ lives. While the newest report by Consumer Financial Protection Bureau (CFPB) shows Americans have upped their debt levels, they have also slowed their usage of credit card cash advances.
The cash advance, sometimes called the “cash line” feature, is available on many credit cards. Cardholders can access “instant cash” from their card’s available credit limit. However, this perk comes with many downsides.
The CFPB report found that cash advance volume has only increased by 2% since 2015, which is far behind the growth in balances and purchase volume. This good news means that consumers are slow to use their credit cards for costly advances. Though the report also found that cash advances are more common during the end of the year, and with the increased pressure to spend on the holidays, it is easy to see why.
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Just Say No to Cash Advances
We get it. Certain spending seasons and life events can make us feel feel financially stressed, and it can be tempting to turn to your credit card to get your hands on more cash. Just don’t. Cash advances are a sticky business, here’s why:
- Cash advances are costly: Not only do cash advances come with a higher APR, but they also start incurring interest at the time they are received. So, even if you pay off your balance each month, a cash advance would be earning pricy interest from day one. On top of this added cost, cash advances also come with a separate fee.
- Cash advances don’t come with protection: You won’t be able to get a grace period for any cash advance balances.
- Cash advances don’t earn rewards: Cash advance spending does not count toward any rewards or promotional spending. You will drive yourself further into debt and further away from your dream trip to Maui.
Cash Advances Happen Even When Cash Isn’t Involved
While using your credit card at an ATM is the most well-known way to access cash advance, issuers might treat other credit card usage as a cash advance and stick you with the fees.
Using your credit card at the casino, purchasing foreign or virtual currency, traveler’s checks, gift cards and prepaid cards can also be treated as a cash advance. Using your credit line to cover shortfalls on a linked account can also be counted as a cash advance.
Best Credit Cards With 0% Introductory Interest Rates
Rather than using a credit card for cash advances, consider applying for a credit card that offers you 0% interest for an introductory period after the account is opened. This gives you time to pay off major purchases without worrying about crippling interest rates on credit card cash advances or store cards.
Bank of America Cash Rewards Card
The Bank of America Cash Rewards Card is among the most popular credit cards for people who want a cash-back card without all of the bells and whistles of the more complicated premium cards. Not only does the Cash Rewards Card reward you generously with 3% and 2% cash-back options, it doesn’t have an annual fee and even offers an introductory 0% interest rate for the first 15 billing cycles.
- Annual Fee: $0
- Intro Interest: 0% into APR for spending during the first 15 billing cycles and for balance transfers within the first 60 days
- Value: 3% cash back in rotating categories and 2% cash back at grocery stores
- Sign-Up Offer: $200 after spending $1,000 during the first three billing cycles
- Pro: 0% intro APR for 15 billing cycles
- Con: Difficult to remember to opt in for rotating categories
Chase Freedom Unlimited
Chase Freedom Unlimited is the perfect rewards card to give you just a little extra back for all of those purchases that do not fall into the popular spending categories like dining or groceries. The Freedom Unlimited gives you 1.5 Ultimate Rewards point per dollar spent on everything, and it also offers 0% interest on purchases made during the first 15 billing cycles.
- Annual Fee: $0
- Intro Interest: 0% introductory APR on purchases and balance transfers for the first 15 billing cycles
- Value: 1.5X points cash back on all purchases
- Sign-Up Bonus: $150 bonus after spending $500 during the first three billing cycles
- Pro: 0% intro APR for 15 months
- Con: Better cash-back cards for spending in other categories
Citi Rewards+℠ Card
If you make a lot of small purchases, like a morning cup of coffee, this could be the card for you. The reason is simple: This rewards credit card rounds up all purchases to the nearest 10 points. A $2 cup of coffee would get you 10 points, for example. The Citi Rewards+℠ Card also earns 2x points at grocery stores and gas stations, and offers 0% interests on all purchases made during the first 15 billing cycles.
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- Annual Fee: $0
- Intro Interest: 0% introductory APR on purchases and balance transfers for the first 15 billing cycles
- Value: 2X points at grocery stores and gas stations (up to $6,000 annually)
- Sign-Up Offer: Earn 15,000 bonus points after spending $1,000 during the first three billing cycles
- Pro: Card always rounds up to the nearest 10 points on all purchases
- Con: Aside from rewards, this card doesn’t offer many benefits
How to Compare Rewards Credit Cards
Still not sure about which rewards cards are right for you? We get it. Choosing a credit card that meets your needs is important, which is why Slickdeals’ Credit Card Hub helps you compare the benefits of different cards, search credit cards by rewards categories, and explore cards by their issuers — all to find the best fit for your wallet.
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