Getting a Cash Advance

• You may not even know that you are taking a cash advance. If you have a cash advance option on your credit card, you can typically draw out cash at an ATM using your credit card. You can also get a cash advance by phone. What you may not realize, however, is that if you receive checks in the mail from your credit card company encouraging you to use the checks to pay bills or to buy something nice for yourself, these checks are also a cash advance.
  
  

Expensive

• Cash advances from your credit card cost you in fees, according to Bankrate.com. Every time you use your credit card to withdraw cash, your card issuer charges you 2 to 4 percent of the amount you take out. In addition, the interest rate on cash advances is higher than your normal interest rate, and you have no grace period. As soon as you receive your cash advance, interest charges begin to accrue.
  
  

Can't Really Afford

• Typically, people who take out cash advances are people who are borrowing money that they really can't afford, says financial adviser Steve Rhode, in a Bankrate.com article. The reason card issuers give for charging higher interest and fees verifies this; a higher rate of default exists among frequent cash-advance users.
  
  

Disclosure

• By law, the fees credit card companies charge consumers have to be out in the open. You can usually find your card's information on your monthly statement or on the back of the solicitation form you receive in the mail, according to Bankrate.com.
  
  

Expert Insight

• You should not use cash advances when you cannot afford them, says Rhode. If you use them for daily living expenses, such as paying for gas, groceries or bills, you have a problem worthy of seeking financial counseling. Use cash advances only when paying by credit is not an option. If you are interested in receiving credit counseling, use a reputable firm that you can find through the National Foundation for Credit Counseling.