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A cash advance is a type of short-term loan that allows borrowers to access cash quickly in the form of a credit card cash advance, merchant cash advance, or payday loan. Borrowers are expected to pay the loan back in a short period of time, usually within a few weeks. While cash advances can be a good option if you need cash in a pinch, they often come with very high rates and fees, and should only be used as a last resort in the case of an emergency.
How a Cash Advance installment loans in Pennsylvania Works
If you need cash fast, a cash advance is a quick and easy way to get cash in hand. However, borrowers should be aware that there are often steep costs associated with cash advances. Cash advance fees, bank fees, and interest can all make cash advances one of the most expensive forms of borrowing out there. In most cases, cash advances take the form of an expensive short-term loan, which the borrower will have to pay back within a few weeks.
Laws and Regulations Concerning Cash Advances
Different states have different rules and regulations when it comes to cash advances and payday loans. While these laws are usually put in place in order to protect consumers from predatory lenders, in many cases regulations are lax when it comes to high interest rates and fees. Laws concerning cash advances ount, maximum loan term length, finance charges, and interest rates. In some states, such as Arizona, Arkansas, Georgia, New Mexico, and North Carolina, payday loans are prohibited entirely.
Why Cash Advances are Expensive
There are a variety of costs and fees associated with cash advances, making them one of the most expensive forms of borrowing. In many cases, borrowers end up paying a significant chunk of money in fees, interest, and other costs on top of paying back the money they borrowed. Because of this, cash advances should be viewed as a last resort and only used during financial emergencies. Costs associated with cash advances include:
- Fees – Depending on the type of cash advance, you may have to pay a variety of fees when you borrow the money. Credit cards often charge a flat fee per cash advance, or charge a percentage-based fee depending on how much you borrow. Payday loans also usually come with hefty fees.
- Interest – No matter what kind of cash advance you take out, you’ll likely be stuck with extremely high interest rates on the money you borrow. Interest can add up fast, even if you only borrow the money for a few weeks.
- Bank and ATM fees – If you take cash out of an ATM or bank using a credit card cash advance fee, you’ll likely have to pay bank and ATM fees. While these are usually only a few dollars per transaction, it can represent an unwelcome additional cost if you’re already strapped for cash.
Types of Cash Advances
When people talk about cash advances, there are several slightly different financial products they may be referring to. These include payday loans, cash advances, and merchant cash advances.
Payday loans offer short-term relief for borrowers who need cash during financial emergencies. However, this form of borrowing can also be dangerous, trapping consumers in a cycle of debt that they may find it difficult to escape from. In most cases, payday loans have a term length of around two weeks, and borrowers are expected to pay back the loan by their next payday in order to avoid additional fees.