To increase CC usage every month will cash advances look good or bad & do they help?

[CreditLuv]

Since I've seen the light from this board and MyFico.com I now understand that to really help your chances in the future to increase one's current credit line limits it's best to try to run as much through your CC's as possible everyday instead of just using your bank debit card, cash or writing checks.

One poster on this board or Myfico (i forgot which one( stated he was running $10-$15K a month on a $5K limit card using this strategy without the cash advances though I think.

My question is two fold.

To help with mass usage of my credit cards (on all my personal and different businesses I own for day to day, monthly and yearly expenses) will CASH ADVANCES help or hurt me in the eyes of the credit card companies in regards to helping me increase my credit limits? Basically do CC companies see someone that takes cash advances differently then someone that spends the exact same amount on some product or service?

Like they're in need of the cash and more of a risk to them. For example instead of paying a contractor for work they do for you with a check you could pay them in cash through a CC cash advance. Yes, you'd get hit with a 2-3% fee. But you would get to run more transactions through your credit cards and thus in theory you would use your CC's more instead of just for purchases of products or services.

Again from everything I've read, besides keeping your CC at a zero balance and then leave $2 on one card every month. For maximum chances to increase your credit lines the more transactions the CC companies see you do every month the more likely they are in the future to give you a CLI but also a bigger one correct?

Please chime in with your first hand experiences with this.

Thanks so much.

I'm finally finalizing my Christmas Breaking Bad marathon (watching Season 5 episode 12) so all his cash has got me thinking cash!

[nocash]

I'm not an expert by any stretch of the imagination; however, I would think cash advances would appear to be more risky than credit card purchases.

[CreditLuv]

@nocash

 

My thinking being an x-banking consultant and trying to think like a credit card company when they review a person's account for approval or for a CLI would be the same as yours.

 

But I also know that in 3 months on myfico.com and this board I've learned more about how CC companies and credit really works then in the last 20 years combined. Most of what's taught and shared on these forums goes against most conventional and common sense advice we all have been told by our parents/family/friends/co-workers or what we've read or heard from mortgage brokers, loan officers, accountants, financial planners, realtors, car dealerships, online, radio, magazines, books, newspapers, TV, etc.

 

Common sense tells all of us to always try and keep your credit cards at a zero balance, but in actuality keeping one card always with a $2 balance is much better. Or how the mass media and so called experts say just keep your credit card balances under 30%, 25% or 20% when in reality your cards should never go over a 10% balance. Or how they say to only use your credit cards for big purchases or for emergencies, when savvy people on these boards know that using your cards a lot and paying them off each month tells CC companies you can handle debt and your very responsible with your cards.

 

Or how most people's logic says CC make nothing on me because I pay off my bill every month, so they make no interest off me. Again savvy people understand that CC companies get paid multiple ways every time you do a transaction regardless if they don't make a penny of interest off youand they make money on balance transfer fees, annual fees (when they apply) and selling your name and information to other companies.

 

I've learned that what I think logically about credit cards and credit in general is usually the opposite of how it really works and how to maximum it for your benefit.

[virtualtreasure]

Cash advances can't effectively bolster usage, even if PIF, in the way standard purchases do. In addition to the fee, there's no grace period for the (typically high rate) cash advance interest accrual, starting from the time of the transaction.

 

Cash advances may be viewed by ccc as a strong indicator of card holder liquidity crisis: they are not considered as usage in the same way as standard purchases, not eligible for rewards, and much more likely to trigger AA.

 

If a cash advance becomes necessary, a low rate CU card would be preferable over a major bank card.

[CreditLuv]

Thanks from Myfico.com board replies and your answer that's what I needed to know. So that strategy is dead and won't be tried by me.

 

Thanks so much Irish.

 

CL

[nht]

To boost the share of your total spending run through a CC, a much better strategy than cash advances would be to buy prepaid cards.

[CreditLuv]

Well it wasn't about boosting product/service purchases that's not an issue. I thought it maybe possible that it would be more beneficial to pull cash out on top of the purchases on the spending runs. Prepaid cards would still just be a product purchase like gas or anything else.

[casemodgod]

Not sure why you'd be concerned about usage with the negatives in your profile.

 

Your goal should be less usage, not more.

 

Your focus shouldn't be on high utilization. Your focus should be on less negative marks.

 

Once thats done, you should look into mfg spend methods on other forums that cover that issue way more

and in more detail.

[GR8WhiTE]

CL..

 

I'm looking at your CCT scores. I see you have set goals for them. They are not the real scores so why bother focusing on those?

[CreditLuv]

They're just the scores I show and mark as improvements in that score. I'm not focusing on them specifically, just the progress in my scores.

[GR8WhiTE]

Kind of a motivational thing? haha

[Tyra]

I agree with all the others that a bunch of cash advances might make you look financially desperate and is more likely to cause adverse action such as lowering your credit limits from your creditors than anything else. If your goal is to increase the spend on your credit cards in hopes of being granted higher credit limits I think the concept you are looking for is called manufactured spend. You can google it.

[Naijaboiler]

If a cash advance becomes necessary, a low rate CU card would be preferable over a major bank card.

+1. From experience, I can tell you this was not viewed in a bad way for me. All I use my DCU credit card for is for the zero-fee cash advance. I don't have even one standard purchase. I run it up to 90% CL during the month, but always make sure it's down to 0 by the end of the month when DCU reports to the credit bureau. Recently, when I called in and asked for for a CLI, I specifically mentioned how I use up to 90% of my CL. The underwriter agreed with me and raised my limit to what i requested.

 

YMMV, but No Cash advance fee low CU rate are the way to go, and also pay it down periodically to 0 regularly so you don't freak them out.

[GR8WhiTE]

I agree with all the others that a bunch of cash advances might make you look financially desperate and is more likely to cause adverse action such as lowering your credit limits from your creditors than anything else. If your goal is to increase the spend on your credit cards in hopes of being granted higher credit limits I think the concept you are looking for is called manufactured spend. You can google it.

you nailed it Tyra

[direct]

From prior experience, I think some card issuers view a cash advance as a negative. I've been declined credit line increases in the past due to "recent frequent borrowing". I think using your card for purchases up to close to the limit and paying them off in full is the best way to show a card issuer that you can handle the credit line assigned and qualify for higher lines. However, using a balance transfer check and then paying off the balance quickly I have found to be just as beneficial as paying off purchases.

[takeshi]

Again from everything I've read, besides keeping your CC at a zero balance and then leave $2 on one card every month. For maximum chances to increase your credit lines the more transactions the CC companies see you do every month the more likely they are in the future to give you a CLI but also a bigger one correct?

Incorrect. If it was just a matter of number of transactions then everyone would be making large numbers of small transactions. Don't count on line items to help you with you limits. Cash advances will not increase your limits and may be perceived as a risk especially if done frequently.

Edited December 30, 2014 by takeshi

[mendelssohn]

As others have said, cash advances are not a good idea. Not only may you scare the creditor from repeated [large] cash advances, you'll be paying a lot of interest since cash advances start charging you interest right away. It's not worth it IMO.

[Naijaboiler]

I have to second what most on here I have said. Regardless of the example I gave earlier, I don't recommend using cash advance often and almost never with Big banks credit cards.

[astro777c]

From prior experience, I think some card issuers view a cash advance as a negative. I've been declined credit line increases in the past due to "recent frequent borrowing". I think using your card for purchases up to close to the limit and paying them off in full is the best way to show a card issuer that you can handle the credit line assigned and qualify for higher lines. However, using a balance transfer check and then paying off the balance quickly I have found to be just as beneficial as paying off purchases.

Have to 2nd that one. I generally (even if not necessary) make use of BT's for 90 day periods then pay it off in full. Just as beneficial? Works just fine here.