Cash advances are quick solutions to money problems. It is a small loan given out by a bank or money lender for a short period. Although it is a solution, there are some shortcomings. This article enlightens the reader on cash advances and their pros and cons.
Types Of Cash Advance
There are three types of cash advances. They are:
Payday Loans are loans issued against the next salary payment. The range of this type of cash advance is up to $1000. The approval and application process for payday loans is straightforward. But, its interest rates are very high. Payday loans are accessible online.
Credit Card Cash Advance
To get a credit card cash advance, a credit card company issues the credit card with a cash limit. An issued credit card is usable in any Automated Teller machine (ATMs) to get cash. Credit card cash advances have high-interest charges.
Merchant Cash Advance
Also known as the business cash advance, this loan is available to business owners. The loans are accessible with no need for collateral. Loan repayment is by deducting from the business bank account. Another repayment method is withdrawing a percentage of proceeds during the loan period. Repayments are adjustable to suit the business.
How to Access a Cash Advance
You can access your short-term cash advance through the following methods:
Visiting the bank
At the bank, you can request cash withdrawal in person. Processing the withdrawal might involve a credit card.
Some credit cards come along with checks. Checks issued after receiving the cash advance are also used to withdraw cash. You can write a check and cash or deposit later.
Using an ATM
Making use of ATM outlets is the most common and convenient method. Visit any ATM branch with your credit card in hand. Input the PIN provided for the credit card. Proceed to withdraw.
Benefits of Cash Advances
Fast and Easy
Cash advances are very convenient and easy to access. Especially during emergencies, banks and lenders give loans out without wasting time.
You can apply for a cash advance in the comfort of your home. It could be online, through calls or emails without visiting the bank or lending company.
After receiving the loan, the borrower gets to spend and use the money any way they want. There are no guidelines or restrictions on using the money. Also, you get to determine the repayment process.
Disadvantages of Cash Advance
The interest and fees required to pay for cash advances are always high. They are far more expensive compared to other types of loans.
Bad Credit Score
Taking too many credit advances leads to a depletion in your credit score. The higher the cash advance, the worse the credit scores.
Cash advances are easy solutions to money emergencies. They are accessible, but they carry higher interest rates. Spending and repaying cash advances are dependent on how the borrower deems fit. Taking too many cash advances affects the borrower’s credit score.