You may have noticed a charge on your bank statement for “an” Express #2401 and are wondering what it is. This charge is likely for a cash advance from your credit card. When you use your credit card to get cash from an ATM, the machine will usually display this code.
How Cash Advances Work
A cash advance is when you use your credit card to get cash from an ATM or by writing a check that uses your credit card account as collateral. Cash advances typically have a higher interest rate than purchases made with your credit card and they also start accruing interest immediately, rather than after a grace period like purchases do.
Why You Might Need a Cash Advance
There are a few reasons why you might need to take out a cash advance. Perhaps you need emergency cash and don’t have time to go to the bank. Or maybe you’re traveling and can’t find an ATM that accepts your card. Whatever the reason, it’s important to be aware of the potential risks associated with taking out a cash advance.
Risks of Taking Out a Cash Advance
The biggest risk of taking out a cash advance is that you will end up paying much more in interest and fees than if you had simply used your credit card to make a purchase. For example, let’s say you take out a $100 cash advance and are charged a $10 fee. That’s equivalent to an APR (annual percentage rate) of 26%. In contrast, the average APR for purchases is around 16%.
Additionally, most cash advances start accruing interest immediately, which means you’ll begin incurring debt from the moment the money hits your hands. And since there’s no grace period like there is with purchases, you’ll begin accruing debt even if you pay off the entire amount when your bill comes due.
Conclusion:
Taking out a cash advance can be costly, so it’s important to understand how they work and weigh the pros and cons before deciding whether or not to do one. With that said, there are some situations where taking out a cash advance might be your best option—such as if you need emergency cash or are traveling and can’t find an ATM that accepts your card. Just be sure to pay off the entire amount quickly to avoid accruing too much debt.
