4. Cash advances on bank credit cards

Another use of bank credit cards, in addition to purchasing goods and services, is to obtain a cash advance from participating banks. A cash advance is a loan and immediately puts cash in ones pocketeither by using the card at a participating bank or by using the convenience checks received from the card issuer when obtaining the card.

Obtaining Cash in a Hurry

Darnell is parked outside his bank and needs cash today. His standard checking account balance is sufficient to provide the cash, and he plans to deposit the paycheck hell receive in a few days to his checking account. Darnell also has a credit card whose terms allow him to obtain a cash advance.

What would be the wisest way for Darnell to get the cash he needs today?

Withdraw the cash from his checking account

Take a cash advance on his credit card

Whichever way is quicker

Why is this the wisest way to get the cash he needs?

There is no interest charged when he takes his own money out of his checking account, but he would be charged interest beginning immediately if he took a cash advance.

There is interest charged on a cash withdrawal from his checking account, but if he took a cash advance, as long as his next credit card payment pays his entire balance due, he wont be charged interest for the cash advance.

Either way; he wont be charged interest, so it doesnt matter.

Many bank credit card issuers charge a transaction fee for non-ATM cash advances. Darnell has a bank credit card. If he takes a non-ATM cash advance, the bank will charge him 2% of the amount of the advance, or a flat fee of $5, whichever is more. Darnell needs to obtain a non-ATM cash advance of $150.

What is his transaction fee? $

This week Darnell is out of town, and has access to cash advances only by non-ATM methods. For each non-ATM cash advance that he takes, he will be charged 2% of the amount of the advance, or a flat fee of $5, whichever is more.

	Darnell took two cash advances during the week, each for $75. What is the total of his cash advances for that week? $
	What would the transaction fee be, based on percentage, for each cash advance? $
	What would the minimum transaction fee be for each cash advance? $
	Which transaction fee will be charged for each of Darnells advances? $
	What will be the total of his transaction fees for the week? $
	If Darnell had taken just one cash advance for $150 at the beginning of the week, what would his transaction fee have been? $
	lower transaction fees by $ .