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Cash Advance

September 5, 2018 by Daniel Azzoli

What is a Cash Advance?

A cash advance is typically a short-term, small-dollar loan. Certain cash advances, like online cash advance loans, may have a simplified application, approval, and funding process. A Cash advance may also be a service that credit card issuers provide, which allows cardholders to withdraw a certain amount of cash from their credit card.

If you’re experiencing a shortage of funds for handling an unexpected emergency expense and need cash quickly, an online cash advance may be right for you if other loan options are not available. Cash advances generally feature higher interest rates or fees than traditional bank loans. Cash advances in the form of online loans may also feature fast approval and quick funding. They’re designed to be a short-term solution and should be used responsibly. You may be able to apply for a cash advance online or over the phone with certain online lenders, or in person.

 

Credit Card Cash Advances

One common type of cash advance involves borrowing money through your credit card. These types of cash advances will generally have very high interest rates which exceed the rates you’d be paying on regular credit card purchases. You also may be charged an additional fee when you use a cash advance. This fee may be a percentage that’s based on the amount of money you’re withdrawing, or a flat rate.

Another important point to note is that interest will generally begin to accrue right way, as there may not be a grace period. This an important distinction from regular credit card purchases, where interest on a purchase will usually start to accrue after a certain period of time has passed.

Payday Loan

Payday loans are a common type of cash advance. These small-dollar personal loans are typically issued by payday loans organizations and the size of the loans issue typically vary from state to state. Like most cash advance loans, they come with high interest rates and fees.

Person using her laptop to look up payday loans online

When you apply for a payday cash advance, there may be some variance between the requirements of different lenders, but there will typically be some overlap. These things may include showing proof of income and having an active bank account. If you’re approved, depending on the lender, you may receive your funds in cash or via electronic deposit, if you’ve applied for cash advance loans online. These loans are generally short term and will need to be repaid by your next paycheck.

Other Borrowing Options

If you’re faced with an unexpected emergency and you don’t think cash advance loans are right for your situation, there are other options out there that may be worth considering.

One potential option is an installment loan. These operate similarly to a payday cash advance in that you’ll receive your funds in a lump sum, but instead of having to repay your loan in full by your next payday, your payments will be spread out over the span of weeks or months.

You may also consider a line of credit. Typically, you only need to apply for a Line of Credit once and, if approved, you are free to withdraw any amount up to your available credit as you see fit. In most cases, you will only pay interest and/or fees on the amount of cash that you withdraw.

How to Repay your Cash Advance

It is important to utilize an online cash advance responsibly and pay it back on time to maintain a good standing account. Depending on your cash advance type, you will repay your advance in full, in installments or in regular minimum payments on your scheduled due dates as set out in your loan agreement. Just remember that before you apply for a cash advance, you should always make sure you have a plan to pay the money you’ve borrowed back on time. Otherwise, you risk piling up late fees and additional interest.

Consider Your Options Carefully

When you’re facing an unexpected emergency expense and don’t have the savings to handle it, a cash advance may be one option that could help you out. Just remember that it’s important to borrow responsibly and understand the terms and conditions of a loan before applying. Always make sure you’ll be able to pay off your loan on time, and explore all of your options before making a decision. If you’d like to learn more about potential lending options, visit our Financial Articles resource hub to learn more!


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* If your loan is approved before 9:00 PM ET from Monday through Thursday, or before 6:30 PM ET Sunday, the funds will typically be deposited into your bank account the next business day, otherwise, your funds will be deposited into your bank account in two (2) business days. The date and time funds are made available to you are subject to your bank's policies.

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