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Q: I know my credit card offers me a cash advance, but it seems like a risky move. Is a cash advance ever a good idea?
A: To say that cash advances are never a good idea is a little bit harsh. But it is rare that you’ll need one. Most places will accept credit cards these days.
If you can avoid taking out a cash advance, you should. The rates are much higher than the standard purchase APR, and you may end up paying ATM fees, too. All in all, you’ll end up paying more than if you just swiped your card.
Sometimes, you can’t use your card. This is more common with fairly cheap things like concession stands or entrance to certain events, and is probably not something you’ll have to borrow money for if you plan ahead and bring some cash.
Even if you don’t remember to bring cash, you can usually find an ATM and withdraw some money out of your checking account.
However, there might be a situation where you need some cash, your checking account is nearly empty, and you can’t use your card.
If that ever does happen to you, a cash advance might be a good idea.
Hopefully this doesn’t happen to you every day, but in a pinch, a cash advance can be useful. Just keep in mind that your cash advance is probably costing you close to 30% interest, so pay it off as soon as you can.
Even better, stop at a grocery store, make a small purchase, and ask for cash back. This won’t be billed as a cash advance, so you won’t pay the higher rate.