Cash Advance

[Anonymous]

So I know that cash advances on your card dont have a grace period for interest like purchases do.  But i dont understand how the interest is calculated for them.  I did take a $20 cash advance out on my $300 limit card and was wondering how the advance is factored and billed.

For instance, lets say my $300 limit card already had purchases on totaling $100 and then I took the $20 cash advance. Then lets say I made a payment 5 days later for Then lets say I put another $50 in purchases after I took the advance.  Now lets say I paid the balance down to $30 and my statement closes for the month, how does the advance get charged? 

I guess what I' tyring to say is that from the total of purchases and advance for the month would be $170 with a $140 payent being made. And technically since the advance was made before the $50 in purchases, would the payment pay off the advance leaving the remaining $30 balance in purchases and not incurring interest daily.

[J91605]

I believe that they apply your payment to the purchases first then your advance. So if you didn't pay the balance off you still being charged interest.

[Anonymous]

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@J91605 wrote:

I believe that they apply your payment to the purchases first then your advance. So if you didn't pay the balance off you still being charged interest.

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Makes sense. I guess their system cant decipher what was charged to the card first and in what order the funds from the payment should be applied.

[J91605]

No. They just get to charge interest from the time of transaction. So they want to keep that going as long as possible. I wouldn't get a cash advance unless I absolutely had to.

[gibeon]

Capital One will apply the payment to the lowest interest rate items first, up to the amount of your minimum payment due, then the remainder to the highest rate amounts, and then down from there.

If you paid $140 on a $170 balance, which included a $20 cash advance (and probably $5 or $10 in fees), your cash advance will be wiped out and won't accrue additional interest.

However the interest that your cash advance DID accrue between advance and payment won't post until the next statement.

I have no idea how they calculate the interest rate on "capitalized" interest (whether it is at the standard rate or the cash advance rate).

I've now confused myself, and when I zero out my QS1, I may try a little experiment to see how it works.

Other lenders of course may be entirely different.

[Anonymous]

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@gibeon wrote:
Capital One will apply the payment to the lowest interest rate items first, up to the amount of your minimum payment due, then the remainder to the highest rate amounts, and then down from there.

If you paid $140 on a $170 balance, which included a $20 cash advance (and probably $5 or $10 in fees), your cash advance will be wiped out and won't accrue additional interest.

However the interest that your cash advance DID accrue between advance and payment won't post until the next statement.

I have no idea how they calculate the interest rate on "capitalized" interest (whether it is at the standard rate or the cash advance rate).

I've now confused myself, and when I zero out my QS1, I may try a little experiment to see how it works.

Other lenders of course may be entirely different.

Thanks for the info entirely.  Half way through writing my original post I confused myself too,  but you understood what I was saying and got confused also.  Funny.  Thanks

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 for the info.  

[Anonymous]

Weird but I thought it's changed a while ago that your payments have to apply to the highest interested items first. Like my chase cards for an example, whatever payments that I sent in they would apply that and wipe out any Cash Advance transactions I have on my account, before it  applies to regular purchases.