Can you cash advance a negative credit card balance?

Can You Cash Advance a Negative Credit Card Balance? A Slightly Weird Financial Trick

Okay, so picture this: your credit card has a negative balance. Maybe you overpaid, or got a refund after paying off a purchase. You’re essentially in credit with your card issuer. Now, the strange question pops up: can you take a cash advance against that negative balance?

The short answer is yes, technically. Think of it like this: when you initiate a cash advance, that money gets applied to your outstanding balance first. Since your balance is negative, the cash advance essentially cancels out that negative amount, and whatever is left over becomes your available credit. It’s almost like the credit card company is giving you your own money back – which, let’s be honest, is a little weird.

The cool part? Cash advances are notorious for their high interest rates. They’re usually the last thing you want to touch on your credit card. But in this scenario, you actually sidestep that interest trap! Because the negative balance is dealt with immediately, there’s no positive balance to accrue interest on. It’s like a little loophole, a tiny win in the world of credit card shenanigans.

I’ll admit, the first time I heard about this, I thought it was pretty clever. Almost too good to be true. And while it is technically possible and can be a way to access your overpaid funds, I still have some reservations. My personal feeling is that it’s probably not the best financial move, even if it seems harmless at first glance.

Here’s why I’d think twice:

• Potential Fees: While you dodge the interest bullet, there might be other fees associated with cash advances. These could include transaction fees (often a percentage of the advance) or ATM fees if you’re withdrawing the cash that way. These fees can eat into the amount you’re actually getting back. Check your credit card agreement for specifics – the Consumer Financial Protection Bureau (CFPB) reports that cash advance fees can range from 3% to 5% of the amount advanced, or a flat fee of $10 or more.
• Underlying Financial Situation: A negative credit card balance, while not inherently bad, can sometimes be a sign of tighter finances. Are you overpaying your card because you’re worried about missing a payment later? Are you relying on refunds to keep your head above water? If so, taking a cash advance might be a temporary fix masking a larger issue. It’s worth taking a moment to assess your overall financial picture and explore other, more sustainable solutions.

Ultimately, while cash advancing a negative balance might seem like a clever hack, it’s not a long-term financial strategy. It might be okay in a genuine pinch, but proceed with caution and consider the potential fees and the underlying reasons for having a negative balance in the first place. Sometimes, simply requesting a refund directly from the credit card company is the simpler and more prudent approach.