Some credit cards offer a cash advance option. But how good
a deal is this?

Not very. In fact, it can be downright expensive.

Why?

Because every time you use your credit card to withdraw
case, more fees kick in:

- Cash advances can carry an upfront fee of 2 percent to 4
percent of the amount advanced.

- The advances have a higher interest rate than regular card
charges.

- Interest charges begin to mount as soon as the money comes
out of the ATM.

- Many issuers also require you to pay down the balances for
purchases before you pay down the higher-interest cash
advance balance.

Here's an example of how these fees kick in:

Assume you bought a television for $500 on your card and
then took out $50 in cash. Even though you pay the $50 back
the next day, you still lose your interest-free period
because the credit provider deems you pay the cash back
last.

As a result you will still owe the $50, but you will now
only owe $450 on the $500 worth of purchases.

You'll continue to forfeit your interest-free period up
until you have completely paid back the full $550. Any
future purchases will still be ahead of the $50 in the
payback line.

The lesson is simple: Avoid using your credit card to
withdraw cash wherever possible. You'll save money as a
result!