Cash Advances Can Be Costly In More Ways Than One

NEW YORK – Nothing beats using your credit card when it comes to protection of your purchases.

That's something on which financial experts generally agree, whether you're buying groceries, paying for items online, or making a big purchase like a car or paying a college tuition bill.

Credit-card transactions are protected under the Fair Credit Billing Act. It's this law that allows you to dispute charges made on your account, including things such as late or unacceptable merchandise, unfulfilled services, and even fraud.

But watch out! Your credit-card company may also be sending you convenience checks. You write them out exactly like checks from your checking account except the money is taken from your credit card instead.

These check advances, however, are treated as cash advances and are not protected like regular credit transactions. You'll notice that on your monthly card statement only the check number will be listed and not the person or business to whom you wrote it.

Using those cash-advance checks can also be a financial pain.

Most cash advances carry upfront fees of 2% to 4% of the amount advanced. In addition, the interest charges -- which may be more than a credit card's regular interest rate of 18% or so -- start accumulating as soon as the ATM or cashier has deposited the cash in your hand.

Some lenders may even require you to pay off your balance for other purchases before you can begin paying off the higher-interest balance for cash advances.

To find out what you'll really pay for cash advances, check your monthly credit-card statements for the specific fees and other charges associated with cash advances -- the law requires card issuers to disclose such information.