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Credit Card Cash Advance Interest Formula:
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Credit card cash advance interest is the fee charged by credit card issuers when you withdraw cash using your credit card. This interest typically starts accruing immediately and often carries higher rates than regular purchases.
The calculator uses the cash advance interest formula:
Where:
Explanation: The formula calculates daily interest by dividing the APR by 365 days, then multiplies by the outstanding balance and number of days.
Details: Understanding cash advance interest costs helps consumers make informed financial decisions and avoid unexpected charges. Cash advances typically have no grace period and higher rates than regular purchases.
Tips: Enter the cash advance balance in dollars, APR as a decimal (e.g., 0.25 for 25%), and the number of days the amount will be outstanding. All values must be positive numbers.
Q1: Why is cash advance interest higher than purchase interest?
A: Cash advances are considered higher risk for lenders, so they typically carry higher interest rates and fees.
Q2: When does cash advance interest start accruing?
A: Unlike purchases, cash advance interest usually starts accruing immediately from the transaction date with no grace period.
Q3: Are there additional fees for cash advances?
A: Yes, most credit cards charge a cash advance fee (typically 3-5% of the amount) in addition to the higher interest rate.
Q4: How can I avoid cash advance interest?
A: Pay off the cash advance balance immediately, use alternative funding sources, or avoid cash advances altogether.
Q5: Does this calculator include cash advance fees?
A: No, this calculator only computes the interest portion. Remember to add any applicable cash advance fees to the total cost.