Sydney Garth, Credit Cards Moderator
Taking out a cash advance has no direct impact on your credit or credit score unless this operation leads to a credit utilization of more than 30-40%.
Just remember that cash advances are very expensive, ultimately causing you to pay much more money ( through fees and interest rates) than you initially withdraw.
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Robert Wilson, Financial Advisor
Yes, when you get a lot of cash advance it is a sign to creditors that you do not have the cash flow to pay your current obligation. They will look at you as a risk and not advance new credit.
Lauren Smith, WalletHub Staff Writer
No, cash advances do not hurt your credit score. Cash advances are not listed on your credit report and your credit score is calculated using the contents of your credit report. As a result, withdrawing cash from a credit line does not have a direct impact on your score.
Still, when you borrow cash from a credit card issuer, there are indirect implications for your credit and overall financial health.
How Cash Advances Can Indirectly Hurt Your Credit
Expensive interest and fee
Cash advances accrue interest immediately. The average APR for a cash advance is 22.53%, and the average transaction fee is approximately 3.84%.
Higher credit utilization
To safeguard your credit score, your credit utilization rate should remain under 30%. If a cash advance pushes you over the 30% threshold, or higher above it than you already are, it will lower your score.
If you borrow cash from your card issuer because of a lack of income or spending power, you may be susceptible to missing payments in the future. Missed payments remain on your credit report for up to 7 years and have an adverse effect on your credit score.
At the end of the day, consumers should avoid cash advances due to the high cost. But if it’s absolutely necessary to borrow cash from a credit card company, you can find a list of the best cash advance credit cards right here.
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