Never take cash advance charges on Credit Card!!!!!

This is probably an experience that I learn and hope to help you to be wiser.

I like to NOTE that I am the kind of guy that clears my credit card by end of each month and not let the bank to earn any interest. I mean I pay on the dot and in full and not a single cent less.

The story goes like this. In CNY, I went back to my hometown and went out to buy some bread. When I was out, I didnt bring any ringgit, all I had was Sgd and there is no money exchanger nearby. So, the best thing was, to just temporary withdraw rm50 from the credit card and pay for the bread then when I return back to SG, clear the bill and thats it.

The following month, the banks send me the statement, I see the bill was - Conversion amount (XX)+ SGD 15.00 fee + SGD 2.50 + interest charges. I was surprised, this a kinda big for a rm50 withdrawal. Nevermind that, I cleared the amount in FULL and take that as a lesson. But, truth be known, it doesnt end there. The following month, I still that I am being charged with interest and sgd 2.50. I was again shocked and gave the credit card company a call, ask WTF is going on.

The explanation is that whatever I clear was just the amount of the date of the statement on 17-Feb, the interest charges continues even when you pay for the sum as per the statement. The interest rates for cash advances runs daily, so the credit company continue to charges you interests until the date you clear the interests on payment date and plus what ever fees that you owe to them.

Bottom line is that a rm50 withdrawal ends with SGD70. It pissed me off. I told the Credit company I am going to pay SGD100 then I am going cut the damn card. So, never never take credit card cash advances but instead withdraw direct from bank account.


This is another explanation on Cash Advances that I got from a website.
http://credit.about.com/od/avoidingdebt/qt/avoid-credit-card-cash-advance.htm

Whenever you get a cash advance on a credit card, the bank starts charging you interest immediately , not after the end of the billing cycle's month as they do with purchases.

That means if you take out $200 on the first day of a two-week trip, for two weeks the credit card issuer will be charging you the highest possible interest rate (not that introductory 9.67%, but the industry ceiling of 19% or more), compounded daily, and will continue to do so until you pay your entire credit card bill all the way down. They often tack on a one-time "service fee" as well.

You may be able to avoid this, however, by being a bit sneaky: they can only charge you interest if you're carrying a balance. The trick is to make sure you never carry a balance on the card by overpaying your bill (by however much you expect to withdraw in cash advances, plus purchases) the month before you leave. It's silly, but it usually works.

Bro, sorry to hear that and thanks for sharing.

Some company especially MNC do arrange cash advance for employee using corporate card with flat rate for employee that travel at airport, e.g. If you need US$1000 , the bank/credit card would charge you a flat admin fee or percentage of amount withdraw e.g 5%, that mean you've to pay US$1050, however, the bank currency rate is not as good as money changer.

Its just the way that the Credit card company makes money and how as a consumer, you have to be wise and don't be coned by their advertise.

traxxas wrote:

Bro, sorry to hear that and thanks for sharing.

Some company especially MNC do arrange cash advance for employee using corporate card with flat rate for employee that travel at airport, e.g. If you need US$1000 , the bank/credit card would charge you a flat admin fee or percentage of amount withdraw e.g 5%, that mean you've to pay US$1050, however, the bank currency rate is not as good as money changer.

Bro, its more than just admin fee or % of the amount withdrawn. Its all about the interest and how you will be forever paying for interest if you are not careful. You need to makesure that you pay in advance and makesure you pay more than what you owe plus interest rates, admin fees, etc......

thanks for sharing bro.

Daffu wrote:

traxxas wrote:

Bro, sorry to hear that and thanks for sharing.

Some company especially MNC do arrange cash advance for employee using corporate card with flat rate for employee that travel at airport, e.g. If you need US$1000 , the bank/credit card would charge you a flat admin fee or percentage of amount withdraw e.g 5%, that mean you've to pay US$1050, however, the bank currency rate is not as good as money changer.

Bro, its more than just admin fee or % of the amount withdrawn. Its all about the interest and how you will be forever paying for interest if you are not careful. You need to makesure that you pay in advance and makesure you pay more than what you owe plus interest rates, admin fees, etc......

yes, whichever higher will win. Most of times I paid the 5% admin charges to the cc company. You're right , you've to pay on time else another 2% of total bill or min imposed amount e.g. $50 + late payment fee + interest. It is better to avoid cash advance unless your company willing to pay for all your "admin" charges..

Thanks for sharing....that why i always carry my crutch bag around especially if i go hunting for the 5 match stick !

Hope this story help in giving you wisdom on money and credit cards. After this, my single prime objective now is to clear my homeloan within 6 years from now. I dont want to be paying a single cents more to the banks.

Don't be fooled by all their programs, their biggest aim is to help you spend money. The more you spend, they are hoping the more debt you have. Then more you owe. So, please be wise.

Bro,

I encounter similar situation as you when I was in China and KL once.

The bank cusotmer service advised me to use my ATM card to withdraw from machine that has Cirrus & Maestro logo on them (my is POSB account).

The exchange rates is not so good but no other misc. charges like for credit card as you are withdrwaing from our own saving account in foreign currencies and not as cash advance from our credit card bank.