What are the implications of withdrawing cash from my credit card immediately after paying it off?
I recently went to a conference in Boston with 3 other students from my university. To make things simpler with the reimbursement process (or so I thought), I paid for everything (airfare, meals, etc. for all of us) on my credit card with a ,000 limit. There was a hiccup in the reimbursement process, and so it's coming a little late - my bill is due tomorrow, on the 24th.
Fortunately, I have a great mother who lent me what I need to finish paying off the card - 0. I just made the payment today, but I'm curious: now that my card is fully paid off, can I take out a cash advance of 0 to pay her back immediately? I would, of course, make this payment when my reimbursement finally goes through.
I'm wondering if there are any implications to my credit score if I make a payment of 0 to pay off the card, then immediately withdraw that as a cash advance to be paid back on the next payment due date. It seems like card companies would flag that as bad behavior - "here's the 0 that I owe you Mr. Card Company. Oh wait... can I have that back? I need to pay rent... I'll get you back in 30 days."
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The timing isn't the issue. The problem as comments stated is that a 'cash advance' has no grace period. It also comes with a fee, typically an immediate 2-5% of the borrowed amount. The total cost can be 5-7% for just that 30 day float.
There are times these cards will send you checks to borrow cash interest free, but still a 2% initial one time cost. And, depending on what else is happening, that may make financial sense, especially if that zero interest offer is a year or more. In your case, the short term need makes this a far worse deal.
(And there's a part of me that wants to say that in a rare event, a total cost of say to borrow this 0, is not a major issue. From a 'feeling' standpoint, clearing the debt to mom might be better than making her wait. Other members might rightly suggest that such borrowing is a bigger sign of trouble, but that's making a logistical leap that might not be right in your case.)
Your idea would not work for the reasons others have mentioned: no grace period on cash advances, possible up front fees, and possible higher APR than purchases. In this scenario you'd be better off not paying off the 0 and leaving it under the purchase APR, which will be the same or lower than the cash advance APR.
To accomplish your goal you'd have to be creative. You pay off your card in full. Then you buy something worth at least 0 for someone else and convince that person to pay you cash for it, which you in turn give back to your mom. This way you would get the grace period for another 30 days. I'm not sure how you would go about doing this though, and I definitely wouldn't recommend doing it with a stranger. (Best Buy would probably kick you out of the store if you stake out the cashier waiting for someone to buy a TV with cash...) Maybe you could just pay 0 worth of your Mom's bills for her on your credit card.
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