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Friday, October 31, 2014  
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Cash advance suicide

Scott Bilker Scott Bilker is the founder of DebtSmart.com and author of the best-selling books, Talk Your Way Out of Credit Card DebtCredit Card and Debt Management, and How to be more Credit Card and Debt Smart. Receive the 5-Year Loan Spreadsheet when you subscribe to his email newsletter.
Cash advance suicide

Scott,

Fantastic info, not for scatterbrains though. I have three cards currently all intro 0% wondering if I made a cash advance of say $1,000.00 then immediately took advantage of 0% balance transfer, would I still be liable for the 24.99% advance rate as well as the fee even though account was paid off the same day or at least within billing cycle? Trying to avoid cash advance suicide, also are there any fund transfer services that make the bank think it’s a purchase?

Matt

Matt,

Thanks for writing–glad to hear that you like what you find here at DebtSmart.com!

I am assuming that you mean that the 0% intro rate is on purchases, so the short answer is yes! You are going to be responsible for the higher rate and fees if you do as you’re thinking. That’s because interest is charged from the moment you take a cash advance. There are no grace periods for cash advances (usually).

The reason why the intro rate is on purchases is because the bank is still making money by charging merchants for each transaction. With this offer, they still get paid for your purchases and that would not be the case for transfers or cash advances.

There is no transfer fund service, that I know of, that would make a cash advance appear as a purchase. What you’re trying to do is convert a purchase rate into a cash advance rate.

Hmmm…thinking creatively I can see one method that would, in theory, work. However, I WOULD NOT recommend it, endorse it, or do it; but I would talk about it. Say you bought something that can be easily sold, like a video game or an expensive watch, with your 0% purchase deal. Then you sold that item on eBay or by some other means so you would get the money. In a sense, you have then gotten cash with your purchase rate. However, there is a cost because it will take your time to do this. You will have to pay fees to do the sale. And, you may not get the full price for the merchandise when you sell it. It’s still interesting to think about and again. I DON’T RECOMMEND DOING THAT!

The best thing to do is use your credit card to purchase stuff you would normally buy with cash (groceries, gas, etc). Then these things would be at 0%. The cash that you would have used to buy those items could then be used to pay off other debt at a high rate. In effect, giving you your own cash at 0% with a grace period. How does that sound?

Cheers,
Scott

This entry was posted in Credit Cards, Financial Planning, Free Content Library. Bookmark the permalink. Read more articles by Scott Bilker. (Also see articles by all authors and articles in all categories.)



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  • Kevin

    A service called Chargesmart.com will allow you to make a ‘purchase’ on a credit card and apply as a transaction and your pay zero-percent for the period your card issuer provided. Chargesmart charges a fee for their service, however I am using it to move a balance from a Kohl’s charge card to a 0% percent APR Discover Card.

 
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