Cash Advances
A cash advance is either a short-term payday loan, or a loan drawn against a credit card or line of credit.
A payday loan is typically used when a borrower is trying to avoid bounced-check fees and late-payment penalties. A cash advance payday loan will get you the money you need to pay your bills, almost immediately. Most lenders will directly deposit the money into your checking account the same or next working business day. To qualify for a payday loan you’ll need to provide a lender with a bank statement or paycheck stub, and a driver’s license or other identification. Getting a payday loan is a simple and reliable way to get cash quickly. There are no lengthy application processes, and very few lenders require credit checks, so as long as you have proof of ability to repay, a payday loan can help you bridge financial difficulties from one payday to the next.
Cash advances are also available by drawing on a preexisting line of credit. Some banking accounts and the majority of credit card companies offer consumers a line of credit that may be withdrawn as cash.
A bank customer may write a check against their line of credit, or may withdraw cash from an ATM often up to and including their credit limit. There is usually a flat-rate fee for withdrawing against the credit line, and some banks and credit unions may charge a monthly rate until the credit line is repaid in full.
A credit card cash advance works in a similar manner. Many credit card companies allow borrowers to obtain cash from an ATM, much like a debit card. Some cards will allow the borrower to withdraw an amount equal to or lower than the cash advance credit limit, which is generally a small percent of the borrower’s overall credit limit. However, some companies will allow consumers to withdraw more than the limit, which means that a borrower can potentially overdraw their credit line. This can result in overdraft credit card fees, so borrowers should be careful not to withdraw more than is necessary. Many credit card companies will also charge a nominal fee for these services and these charges will appear on the monthly statements.
Cash advances are designed to offer immediate relief, which means they are not intended for long term financial support. However, both payday loans and credit line loans offer borrowers a way to roll their funds into another term. The term on a payday loan is usually two weeks to one month, but if a borrower cannot pay, most lenders allow the balance to be rolled into another term, and the borrower need only pay the refinance charges. A credit line loan typically carries a month-long term, and the charges are simply added to the monthly credit card billing cycle. The interest rate on a cash advance may be higher than the regular credit card interest rate, but consumers who are able to pay off their credit card bills monthly may be granted a lower rate as a reward. As with most credit card purchases, a cash advance must be paid off in full within a month or the borrower can expect finance charges and interest to capitalize on the balance.
Cash advances are easy to obtain, and help consumers to cover immediate financial obligations. Online loan companies now make it even easier to get the cash you need, when you need it, Though they’re not intended for continual support, these loans offer flexibility, and no restrictions on where or how you spend the money, and consumers appreciate the high level of privacy that comes with cash advance loans.