May 24, 2019
We’ve all experienced a time when we’ve run short on cash to pay an upcoming bill. Maybe the bill just slipped your mind or an unexpected emergency expense came up, leaving you short on cash to pay your remaining bills for the month.
In times of need like this, you may look for options out there where you can get a fast cash advance from cash advance loans online. While these may seem like a good way to remedy your shortage of money, the truth is that cash advance loans online or offline can start out as a quick, immediate solution. However, their long-term consequences can be costly, taking a negative toll on you in the future.
If this is your first time looking for a cash advance loan, we recommend you know the basics before you sign up for one.
First of all…what is a cash advance?
A cash advance loan is defined as a short-term loan you can get from a bank or lender that allows you to borrow a certain amount of cash. These are typically appealing to borrowers because of their fast approval and withdrawal of money but can be quite expensive when it comes to their interest rates and/or fees. You can either get cash advance loans online or in-store, depending on your preference.
There are three main types of cash advance loans: a credit card cash advance, merchant cash advance, and payday loan advance. Each of these has slightly different requirements to qualify and can vary between the fees and interest charged and the amount borrowed.
1. Credit card cash advance
This allows you to borrow money from your credit card (up your cash advance limit found on your credit card statement), which can be withdrawn at an ATM or potentially a check that’s deposited or cashed at a bank. While this option is one of the most popular to get a fast cash advance, it’s also very expensive, with the typical annual interest rate around 24%! Yep, that’s 6% higher than the average interest rate credit card holders pay on transactions. Plus, there’s usually a 5% fee that comes with a cash advance that’s charged by the card company. Additionally, if you plan on withdrawing cash from an ATM, don’t forget about the ATM usage fee!
2. Merchant cash advance
These are cash advance loans given to companies or merchants by banks or lenders with amounts varying up to 6 figures. For businesses with average credit scores looking for extra money for their finances, this can seem like a good alternative because it’s fast and there are multiple factors that are considered for approval (eg; company profit) rather than just a credit score. However, merchant cash advance loans have high factor rates that range from 1.14-1.48. Rather than using an interest rate to determine fees, the factor rate is multiplied by the loan amount to determine how much a business will owe. (When this is converted to APR, rates range from 15%-100%+ )…Yikes!
3. Payday loan advance
Sometimes referred to as a ‘cash advance,’ payday loans range from $50 to $1,000 and come with very steep fees. While fees can be around $15 for every $100 borrowed, interest rates are usually 100%+. Payday loans fees are determined by state regulations and the size of a borrower’s paycheck. Since these have a very short time frame to repay (usually the borrower’s next paycheck), the loans are usually rolled over. This makes them even more expensive. A Consumer Financial Protection Bureau study found that over 80% of all payday loans are rolled over within 30 days of the previous loan. This can be a fast cash advance option. However, it’s one to avoid since it can easily turn into a long-term debt trap.
The cost of a cash advance
Between the three main types of cash advances out there, there’s no doubt that they will come with an expensive price tag. While you may only be concerned with finding a fast cash advance, what you should be looking at are the strings attached.
Specifically, keep an eye out for:
– Cash advance fees
– Interest rates
– ATM or bank fees
– The time you have to pay back (+ any additional late fees)
– Payment allocation (how your credit card issuer may be allocating your payments)
This may seem like a lot to digest. Luckily, there are solutions out there that are zero interest, zero fees, and require no credit check!
Do cash advances loans online affect your credit score?
While your credit score isn’t directly affected by the use of a cash advance loan online, it can still be indirectly affected.
For example, if you use a credit card cash advance, your outstanding balance will increase. This will ultimately raise your credit utilization ratio. When determining your credit score, having a high utilization rate shows you may be a risky spender and may then negatively impact your credit score. Additionally, if you end up passing your credit limit, your credit score can also be affected.
Being unable to pay back a cash advance loan in a timely manner is another way your credit score could be impacted, whether it be from a credit card cash advance, merchant cash advance or payday loan advance. With such high fees and interest rates, paying back on time can be difficult, and the cash advance loan lenders are hoping you will roll-over your advance so that they can earn more money.
Try Brigit instead
Brigit is an app with unique budgeting features and customized alerts that can help you avoid the fees, interest, and credit checks altogether. Brigit’s fast, 60-second approval process requires no paperwork to fill out. It does not require a credit check. Because we don’t ask for your social security number, our service won’t impact your credit score at all. 🙌
Additionally, there’s zero interest, zero hidden fees, and…wait for it…free extensions! We know things come up, sometimes leaving you a bit short on cash. If you find yourself running low, and can’t pay us back on time, you’re able to extend your due date with no penalty whatsoever!
Here’s why Brigit beats other solutions out there
1. We’re simple.
When you sign up, we’ll only ask information that’s needed to determine your personalized amount. With our overdraft prediction and Auto Advances, we give you the option to let us do all the work for you. That way, we’ll keep an eye on your balance and send you money automatically, so you don’t ever have to worry about dipping below $0. Just enable once, and you’re good to go!
2. We’re fast.
Our sign up and approval process takes less than 60 seconds. That’s less than making a cup of coffee! We also have standard and express delivery options, you’re able to get the help you need instantly.
3. We’re flexible.
We understand that it can sometimes be difficult to make it to your due date. If you’re running short on cash and need a bit more time, we’ll let you extend your due date for free with no penalties! Additionally, if you’d like to repay early, you are able to do that as well!
4. We’re transparent.
When signing up, we will not require a credit check from you, nor will using Brigit affect your credit score! We believe you are more than your credit. For this reason, we don’t need this information from you to approve you for funds.
For a $9.99 monthly membership fee, you’ll be able to get financial tools tailored to your spending habits and if you need them, cash sent to your account with no transfer fees. There are no delivery fees, no interest or hidden fees, and no tips! You will also have access to free extensions.