How To Manage A Cash Advance Wisely To Save Money

If you have ever had to take out a cash advance on your credit card, you know that it can be a risky proposition. As a result, it’s important to manage the cash advance wisely to make sure it doesn’t end up costing you more money than you expected.

If you do manage to get a cash advance, here are seven tips that can help you make the most of it.

woman's hands cutting a credit card with scissors

1. Pay Down Your Credit Card Debt

The first thing to do is to figure out how to avoid taking out a cash advance in the first place. You can do this by using your credit card wisely.

For example, if you can pay off at least 20% of your monthly credit card balance, you’ll be able to use your card without incurring fees. In other words, you won’t need to take out a cash advance.

If your card has an interest rate of 15%, try to pay off the entire balance at the end of each billing cycle. If you don’t, you may end up paying more in interest than you would have by simply paying the minimum payment each month.

2. Ask For a Lower APR

A cash advance APR is the interest rate that will be charged if you decide to take out a cash advance on your credit card. Since APR is based on the average credit card interest rate on bank cards, it’s not unreasonable to expect that the APR on your credit card will be higher than the average rate.

If you can find a credit card with a lower APR than the one on your cash advance card, consider applying for it. You might even consider applying for more than one credit card with different APRs. This way, if you start taking out cash advances too often, you can choose which card you want to use.

If you can find a credit card with a lower APR than the one on your cash advance card, consider applying for it. This way, if you start taking out cash advances too often, you can choose which card you want to use.

A lower APR can help improve your credit score by allowing you to keep more of your monthly payments.

3. Get Rid of Bill Pay

If you use bill pay on your credit card, try switching it to direct deposit or check writing. You can also ask your bank for an overdraft line of credit so you can take out a cash advance without paying a fee.

4. Negotiate Your Interest Rate

You should also ask your credit card company to negotiate your interest rate. There is no law that says they have to do this, but many credit card issuers will do this on request if they are able to do so.

If they do agree to lower your interest rate, be sure to write down the new rate and stick with it.

5. Settle for Less Cash Advance Interest

If your credit card company agrees to lower your interest rate and you stick with it, be sure to pay your bill in full at the end of each billing cycle so you don’t end up paying more in interest than you would have by just paying off your balance each month.

6. Use an Overdraft Line of Credit

Another alternative is using an overdraft line of credit. This will let you take out a cash advance without paying an overdraft fee or any interest on the amount that goes over your available balance.

Just make sure that you keep at least $100 in available funds each time you take out an overdraft. Otherwise, your overdraft limit could get reduced and you might get hit with fees.

7. Cancel Your Most Expensive Emergency Outlets

If you want to save money on taking out a cash advance, don’t use your credit card for emergencies like medical care, auto repairs, and home repairs.

These types of expenses should be paid with cash or a check so that you don’t have to pay anything extra. Instead, use a cash advance only when you absolutely have to or when it makes sense to use a cash advance instead of paying with a check or cash.

8. Keep Track of the Amount You’re Using to Pay Off Your Credit Card Debt

If you’re using a cash advance to pay off your credit card debt, be sure to keep track of the amount youre using each month. That way, you can see whether or not its making more sense to use a cash advance instead of paying off your balance in full.

These financial tips for managing a cash advance will help you to save money and minimize the risk of having to take out a cash advance in the first place.

9. Consider Going Over the Limit on a Cash Advance and Requesting Extra Fees

If you’re using a cash advance to pay off your credit card debt, consider going over the limit on a few occasions. Doing this might help you to get the interest rate on your cash advance lowered or waived altogether. Just make sure that you’re prepared to deal with any extra fees that might occur as a result of going over the limit.

When managing a cash advance wisely, it’s important to remember that it’s not always possible to avoid taking out a cash advance altogether since some emergencies can’t be paid with cash or checks. If this is the case, be sure that you know how much money you could be spending if you have to take out a cash advance instead of paying with checks or cash.