People like knowing that the service is available and they use it as needed. Out in the open The fees and charges applied to cash advances are not hidden fees. By law, card issuers are required to disclose information about fees and charges associated with all of their services. This information is typically displayed on the back of the solicitation form and on the monthly statements. When people use a credit card for a purchase or a cash advance, they know they are using credit.
Card issuers say they have two reasons to charge the additional fees.
There is a greater cost to process cash transactions than to process regular credit card purchases, and there's a higher frequency of default among frequent cash-advance users. The higher costs and increased delinquency risk are passed along to the consumer. Consumers are accustomed to knowing that certain transactions and services come with a fee, Tencer says. When using a cash advance, they are aware of the fees and they make adjustments accordingly. Not so, says Renee Rupe, education director of Consumer Credit Counseling Service of Denver .