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In January I made a cash advance of $110 with my credit card. In Februaury, I paid off January's balance (+$10 cash advance fee +$1.82 cash advance interest) in full by the statement due date. This month, I have $1.42 in cash-advance interest even though last month statement was paid in full.

Where is the interest coming from? Between the statement date and the due date?

Why isn't the interest significanly different? If it was fully paid off the first month, should the interest the second time be only interest on interest?

That was my first time doing cash advance... I thought it would work more like a debit card (just a one time fee) if paid in full.

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Unlike normal charges interest begins accruing on cash advances immediately. On a normal charge you're not charged interest until the grace period is over.

You paid interest from the time the cash advance occurred until the statement closing date. Between the statement closing date and the bill due date you were still accruing interest on that cash advance balance which is now appearing on new statement.

More detail:

Cash advance should really be avoided primarily because the interest is immediate, and a payment is credited to the account rather than toward a specific charge or cash advance (though IIRC payments should credit the highest rate first by law in the US now). Some banks will not let you pay the cash advance specifically, even over the phone.

In a normal charge situation, where you've been paying in full every month and not paying any interest, you will not begin accruing interest until after you let a balance remain past the grace period which is typically the statement due date. That's why you can just pay in full at the end of the month and not receive interest charges. Cash advances will accrue interest from the date the cash is sent until it's paid in full regardless of grace periods or statement dates.

Consider this situation, I'm making these dates up but this is generally how it works. Your statement period is 12/15/2015 through 1/14/2016, the statement is due on 2/10/2016. You made the cash advance on 1/1/2016. You paid it on the 2/10/2016 payment. You weren't being charged multiple months of interest, you just paid the interest that accrued from 1/1/2016 through 2/10/2016 (the date the cash advance occurred all the way through the date it was paid in full) over two consecutive statements.

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    Correct, at some point you need to have a zero balance. You can attempt to call them and see what they can do for you. – Pete B. Mar 7 '16 at 21:05
  • I called them and they paid off everything plus additional interest. Thats stupid that it would just keep generating interest fees, and requires a phone call to fix. – heyitsmyusername Mar 7 '16 at 21:09
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    @heyitsmyusername, it doesn't require a phone call to "fix." The service rep just did you a favor. – quid Mar 7 '16 at 21:10
  • @quid If i did a cash advance again, How would i eliminate the interest charged for multiple months? Or is that completely unavoidable? – heyitsmyusername Mar 7 '16 at 21:12
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    @heyitsmyusername The best solution is not to take anymore cash advances. :) But if you choose to do so again, when you are ready to pay it off, pay the entire current balance of your account (not just the statement balance) and ensure that your balance goes to zero before using your card again. By the way, a cash advance is one of the most expensive ways to borrow money. – Ben Miller Mar 7 '16 at 21:47

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