I took a cash advance from a credit card last week. I had never done that before. I’m very happy I was able to do it. I’m also very happy with the cost and the efficiency of how it was done, even though I borrowed at 39,608% APR.
I had been in the process of doing a mortgage refinance. At 9:30 in the morning that day, I got an e-mail from my loan advisor with my final HUD-1 closing statement. Documents signing was scheduled at 11:00. I had been waiting for this for quite a while. I had money ready in my Fidelity mySmart Cash account. Not a problem, except they required a certified check.
In my previous refinances, I’ve always been able to submit a personal check. So I erroneously assumed that it would also be the case this time, without asking the loan advisor ahead of time. My bad. I needed about $4,000 for a certified check. I had to have it in about one hour.
I also have a checking account with Wells Fargo, although I only used it for depositing paper checks. I went into a Wells Fargo branch and asked them if they would allow me to deposit a personal check (from Fidelity mySmart Cash) and make it immediately available for the certified check. Despite my having a “top of the line” relationship checking account with Wells Fargo, they said no, which I could understand. I was basically asking them to advance money to me before they collect on the check.
I called Fidelity. They said in any single day I can withdraw maximum $500 from an ATM and do a cash advance against the Visa debit card in a bank branch for up to $2,499. Theoretically I could do both and get $2,999. Because the Wells Fargo ATM charged $3 fee, withdrawing $500 plus the $3 fee would throw me over the $500 limit. I had to withdraw $480. Together with the $2,499 cash advance, I got $2,979.
With the few hundred dollars that happened to be sitting in my Wells Fargo checking account, I was still short $300. Although I was disappointed with Wells Fargo not trusting me for even $300, I was focused on getting the certified check done as opposed to whom I should blame for my scramble.
I took out my Chase credit card and did a cash advance against it for $300. The cash advance fee from Chase was 3% of the advance, with a minimum of $10. Interest would also accrue right away without a grace period. Because I was able to make a payment on Chase’s web site with the linked checking account and they would make it effective on the same day, I would not owe any interest. Even if there was interest for a few days, the interest would be minimal ($300 * 20% / 365 = $0.16 per day).
$10 cash advance fee did it. I gave my card, signed a slip, and got $300 in a few minutes. I walked out of the bank with the certified check I needed. I signed the refinance documents on time. By coincidence, mortgage interest rate went up as much as 0.75% on the same day I signed my documents. I did not want to give the lender any excuse to back out of the deal.
The APR for the $10 fee on a $300 cash advance for two days is 39,608%. To be honest I don’t care although I calculated it for writing this post. Chase credit card gave me the money when I needed it. Nobody else could do it in the same timeframe for less. That’s what mattered.
After the dust settles, I need to re-think how I should handle emergency cash needs. When I come up with a strategy, I will write about it. Meanwhile here’s my question for you to think about:
If you need $4,000 in the next hour, how will you get it and how much will it cost you?