Re: CASH ADVANCE QUESTION

Anonymous · ‎01-06-2016

I have a friend who asked me what I thought about a plan of his, and I didn't have an answer for him. Maybe someone here can help out.

He wants to take a cash advance on one of his cards in the amount of 1,500 that has a 10.000 limit and 2,000 available for cash advance.

His plan is to take the cash advance and after it posts, do a BT to another of his cards that has an offer of no fee BT and 18 months at 0%.

Is it possible to do this?

Anonymous · ‎01-06-2016

@Anonymous wrote:
I have a friend who asked me what I thought about a plan of his, and I didn't have an answer for him. Maybe someone here can help out.
He wants to take a cash advance on one of his cards in the amount of 1,500 that has a 10.000 limit and 2,000 available for cash advance.

His plan is to take the cash advance and after it posts, do a BT to another of his cards that has an offer of no fee BT and 18 months at 0%.

Is it possible to do this?

It's possible, but I don't think many people would say it's a good idea.

Is there a CA fee? CA's usually don't have a grace period so he'll be on the hook for interest from day one until the balance transfer is completed, which can be weeks.

Beyond that, some say that CCC's frown on you/treat you badly if you've done a CA. No first hand experience, just what I've read here.

What card does he have the BT offer on? Many cards let you BT directly into your checking account. That would be ideal.

Anonymous · ‎01-06-2016

I applaud your friend's creativity in trying to "game" the system to grab cash without "paying fees"

alas, the fee hits immediately once you do the cash advance, which is why you'd never be able to do it for the full amount available--eg 2000, you can only get up maybe 1800 or 1700--depending on the APR for cash advance.

It is smart though, to do the BT right away--the cc company whom he did the Cash advance on, wouldn't know its a BT--they'd simply see it as a payment. GENERALLY the way the credit company applies the payment made to a card that has a cash advance done is..to apply the minimum...and than the rest goes on whichever balance has the highest APR (sometimes purchase APR is higher than cash advance, but generally its Cash advance APR > Purchase APR).

So if he only made the minimum payment, it would never go towards the cash advance balance (not that this applies to him, but for anyone who is interested).

*If he does the BT right away, he only pays the APR fee once.

obviously if the balance sticks and he doesn't pay it off in full, it would continue to generate APR interest.

He should, ask the cc company if they have any convenience checks available or balance transfer offers (that allow for a convenience check, Citi is probably most generous with actually mailing you one, whetheras Chase will always say its up to the "marketing" team <- of which you can never talk direct with).

Because with convenience checks, he can cash it and it is from the same pot of limit cash advance has...BUT the fee is 2-3% for BT kwim?

UncleB · ‎01-07-2016

@Anonymous wrote:
I have a friend who asked me what I thought about a plan of his, and I didn't have an answer for him. Maybe someone here can help out.
He wants to take a cash advance on one of his cards in the amount of 1,500 that has a 10.000 limit and 2,000 available for cash advance.

His plan is to take the cash advance and after it posts, do a BT to another of his cards that has an offer of no fee BT and 18 months at 0%.

Is it possible to do this?

That would actually work, and assuming there's no better alternative to get the cash it would likely be the most efficient way (fee-wise) as well.

While it's true that lenders often times 'frown' on taking cash advances, if it's promptly paid in full using a balance transfer (or otherwise) there will likely be no repercussions, especially if your friend's overall utilization and scores are in good shape. The deal you describe is especially attractive due to there being no fee on the balance transfer... that means the only fees involved will be the initial cash advance fee and the little bit of daily interest until the balance transfer is processed. Having 18 months at 0% more than makes up for the initial CA fee and incidental interest, IMO.

Again, if there is no better way to get the cash, this seems to be a good option. I have a similar 'emergency' plan set up... in my case, I would take a no-fee cash advance from USAA, then immediately pay it off with a no-fee balance transfer from NFCU, very similar to your friend's plan.

SouthJamaica · ‎01-07-2016

@Anonymous wrote:
I have a friend who asked me what I thought about a plan of his, and I didn't have an answer for him. Maybe someone here can help out.
He wants to take a cash advance on one of his cards in the amount of 1,500 that has a 10.000 limit and 2,000 available for cash advance.

His plan is to take the cash advance and after it posts, do a BT to another of his cards that has an offer of no fee BT and 18 months at 0%.

Is it possible to do this?

Yes he could do it but most cards have a hefty cash advance fee.