Cash Advances Interview with WCCO Radio Minnesota

By Media Relations Senior Industry Analyst Matt Schulz spoke on Wednesday, June 3, 2015, with Josh Hines of WCCO Radio Minnesota about the results of the June 2015 Cash Advances survey. The interview and transcript are below.


Josh Hines: It is 10:37. Oftentimes we get the chance here on Mid-Morning Money, this segment, to warn you about some things that might just be a bad idea. And today we’re helped out with our friend from That’s Matt Schulz, the Senior Industry Analyst here, taking a look at credit cards and one possible pitfall. Matt, welcome to the radio here today on WCCO.

Matt Schulz: Thanks for having me.

Hines: You and I have chatted before, but this time about something different. This is about the dangerous fees – I should not say dangerous – but the heavy fees that you could be stuck with if you happen to take a cash advance from your credit card. Tell me how this works, and tell me where the pitfalls are.

Schulz: Generally with a cash advance, you’re talking about using your credit card to get cash out of an ATM. There are other situations, but that’s the most typical one. The problem with that is when you do that, you are looking at an interest rate of about 24% on that withdrawal and a fee of about 5% of the transaction. So it’s a lot of money.

Hines: Well you know first of all, when you look at it like a regular purchase on a credit card it might have an interest rate of, maybe let’s say 15%, but because you’re doing this cash thing it allows them to bump that up and I’m sure that’s probably in the fine print that I skipped over at one point.

Schulz: Yeah exactly. It is all in the fine print. And the average interest rate on that’s about 23.5% compared to the average credit card purchase interest rate, which is about fifteen. So again really big difference.

Hines: And you found some variations out there, too, even some high swings like the, what is it, the First Premier Bank credit card up as much as 36%?

Schulz: Yeah, they are kind of traditionally known as a card that has really high APR and it’s about 36%, which interestingly enough is the same as their standard purchase APR on that card. Then the other ones we found were up around 30% and those were all gas station cards. We’ve seen in previous surveys we’ve done that those cards are generally have higher APRs than other cards so that wasn’t all that surprising.

Hines: You know, when we look at this, though, so other interesting aspects of this because you break down just what a typical $1,000 cash advance could cost when it was all said and done. Even if paid it back within 30 days.

Schulz: You’re looking at about $70 in that scenario because if you take out $1,000 you’d be looking at about a $50 fee upfront and then about $20 in interest, just in that 30 day period. So it’s a lot of money.

Hines: Yeah, I would say it’s a lot of money. It really is. Something else, though: you also pointed out that there are some people who could be taking a cash advance without really fully realizing it.

Schulz: Yeah, generally if you are trying to use one of those convenience checks that they send you in the mail or doing something like a wire transfer or a money order, a lot of times banks will treat those as a cash advance and charge you a little bit more for them because they seem them as more risky than your average credit card purchase.

Hines: And you have to be careful, too, I’m guessing here. Matt Schulz, my guest from is the Senior Industry Analyst there. You have to be careful, too, in terms of the pay back on here because it can take much longer, even if you already carry some balance from before.

Schulz: It can. What’s interesting is that you’re charged interest immediately with cash advances unlike regular credit card purchases where you have a grace period so that can make those super high APRs an even scarier deal.

Hines: But sometimes people find that it might be the only option if they need to put some cash in their account or something like that, that charging that cash is the way to go about it. What’s the advice then?

Schulz: Well, cash advances can be the best of a bunch of really bad options when times get tough, but they are something you’d want to avoid under normal circumstances. But they can be cheaper than a payday loan or a personal loan and sometimes even cheaper than just overdrafting your account. You just need to be sure you know what you’re getting into.

Hines: I think that’s what it comes down to all the time here, right Matt? Make sure you know what you’re getting into? People can get more on this and also take a look at the entire article if you go to It’s a great place to sort of take a look around and see what’s happening in the credit card industry. I mean, it’s a big industry in this country, isn’t it? Worldwide, for that matter.

Schulz: Exactly, and there’s no shortage of news going on.

Hines: Matt, thanks for your time this morning on WCCO.

Schulz: Thank you.

Hines: Always welcome the opportunity, welcome conversation.

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