CC strategy questions to (re)build credit

[john398]

Also your cash advance limit maybe very low compared to your actual credit limit, and people that have used cash advances sometimes have adverse action taken

[SwiftTone]

Interest charges for cash advances start accruing immediately after you take a cash advance. There are no grace periods liek you would have for regular purchases(pay by the due date)

[Revelate]

Interest on cash advances is generally accrued the instant you take the cash advance (in addition to other fees), there's no grace period on them.

Banks like regularity: I can't think of a single reason to get a cash advance legitimately unless for some reason I had a desperate need of it... but I'm struggling to think of a single situation these days where that'd be the case: everyone takes credit cards now except for services under the table so to speak.

I think lenders look at it the same way, they like nice, predictable behavior, and cash advances are anything but.  I'd also suggest that banks hate dealing in cash and would go to full electronic transactions if they could... so while they offer it, it really should be ignored.

[LisaPA]

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@natasjlp wrote:

I am curious about credit building strategies that would involve something along the lines of obtaining cash advances from your credit card, depositing that money into your bank account and then pay the balance of your cc bill before interest is charged. So that the cc company sees that you use the card a lot and pay it all off every month etc... 

also if you did this with enough cc and high enough cl you could theoretically have a high enough average daily balance to waive any checking account fees.

I am trying to learn about strategies like this but don't even know what it is called or how to reference to this type of strategy. makes it hard to research if you don't know how to reference to it.

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Based on your later comment where you mention the "checks that they send you", you're talking about 2 different things: cash advances and convenience checks.

Cash advances are a bad idea - they have associated very high fees that accrue from day one and are a red flag to the creditor that you may not have the money to pay your bills (taking a cash advance on one card to pay the other, for example).

Convenience checks, on the other hand, are usually treated like a balance transfer rather than a cash advance. You write the check to anyone you want, including yourself, and you get charged a ~$5 fee or % of the amount, whichever is greater. Typically, these checks charge a reduced or zero interest for the term of the agreement. Using one of these checks to pay yourself is referred to as credit card arbitrage and there are a lot of blogs and websites that talk about it.

Back in the old days of interest rates above 1%, you could put that money into a short-term CD and actually make more money on the interest than you paid to the CC company, but those days are over. It still might be worth it if you had a loan with a higher interest - a 3% fee and 0% interest for a year deal is better than 8% fixed interest on a loan, as long as you paid it off in that year.

But to do it like you're talking about seems pretty pointless in this interest rate environment - the CC company would certainly love it, as they would make a lot of money on you, but it's not in your financial interest to do so.