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Look through any thread about a manufactured spending technique and I guarantee you’ll see the question, “Will there be a cash advance fee?” Seriously, I dare you. You’ll see what I mean.
Despite the fact that it’s asked over and over, it’s a very valid question. Cash advance fees are killer. On average they cost 2-5% of the amount of “cash” you take out and you don’t earn any points on the “purchase.” It’s a lose-lose. In addition to that, those that carry a balance also have to pay interest on the cash advance (please don’t do that, ever).
So, will you be charged a cash advance for ….? Maybe.
Disclaimer: This post is for informational purposes only. There’s always the chance that a card issuer could change it’s rules and start coding a purchase as a cash advance, so be aware that this information could become outdated. In other words, if for some reason you are charged a cash advance fee, even though I say below that it likely won’t be, don’t get mad! 🙂
A cash advance fee is a fee charged when you receive cash out of your credit card. For example, if you were to go the ATM and withdraw $100 from your credit card, you would be hit with a cash advance fee.
The fee can be anywhere from a few dollars to a small percentage of the cash advance. Most of the time it’s something like, “The greater of $5 or 3%.” As an example, let’s say you withdrew $100 out of an ATM. That withdrawal would cost $5 on top of any ATM fees. If you were to withdraw $200, that would be $6 on top of any ATM fees. There’s no point in paying those extra fees when you could just use a debit card to withdraw the cash. It’s all around a bad deal.
Most transactions that take place at a bank or financial institution will be considered a cash advance by your credit card issuer. For instance, ATM withdrawals, bank account loads, cash advances to a bank account (obviously), ect.
Unfortunately, there isn’t a guidebook that will tell you which transactions will/won’t code as a cash advance, but you can be prepared for a cash advance by lowering your cash line to $0 on your credit cards.
Different banks have different rules, and as such every major credit card issuer has a different rule on whether you can lower your cash advance line to $0 or not. Here are the major banks rules:
HT: Doctor of Credit
Charge cards (e.g. Amex Platinum, Amex Gold, Ink Bold), not to be confused with credit cards, do not allow you to carry a balance month to month (not that you should). Because of that, they don’t have credit limits or cash advance line limits. So, if you’re ever on the fence about a purchase and you don’t/can’t lower your cash advance line to $0 on your credit cards, test the purchase with a charge card.
These are general rules to cash advances that should be followed during all transactions.
The following information is from my experience as to whether a manufactured spending method coded as a cash advance or not.
There’s no way to guarantee a transaction will be a cash advance or not, since each bank is different and they could change the way they code a transaction at anytime. However, you can take the information above as a guideline to hopefully help you answer the age-old manufactured spending question, “Will there be a cash advance fee?“