advance is a short term, high cost, unsecured personal loan. One option is a credit card cash advance, which offers a quick and easy way to access money using a credit card. There is usually a one-time transaction fee up to 5% of the loan amount. Repayment of a credit card cash advance may be subject to a higher interest rate than a normal credit charge.
Another option is a cash advance loan which must be repaid on the next payday. To cover the fees for a payday cash advance, the borrower usually authorizes an automatic bank withdrawal, or
writes a post dated check to the lender for the amount
of the cash advance, plus the lenders fee. The lender
then gives the borrower the amount of the check, minus
the lender's fee.
The fees charged for a cash advance
loan are typically a percentage of the amount loaned, which
can be 15% to 20%. Lenders are required to provide a
truth in lending disclosure that shows the full cost of
the loan. The term of the cash advance usually
ranges from about one to two weeks, with time extensions
available, but more fees can becharged for each
Getting a new credit card for a cash advance requires a good credit history. However, the credit rating does not matter with a
payday cash advance. Late payments, collection accounts or
other bad credit does not affect loan approval. Equity or assets are not a factor for either loan.
The purpose of a cash advance is usually to
provide a way to pay for emergency or immediate expenses
that cannot wait. While
the fees can be high, they may worth the cost compared to
alternative expenses, like late charges for utility
reconnection, rent penalties, or bounced checks.
If you decide to use a cash advance, just remember
that it is only a short term loan, and any extensions
can be very expensive. Borrow only as much as you will
be able to repay.