Cash Advance Loans: Payday Loans Under Another Name
Payday loans have a terrible reputation. They take advantage of a person’s need for short-term cash by charging high interest rates and offering unrealistic repayment schedules. They are an expensive, long-term solution to a short-term problem.
That’s why many payday lenders have decided to call themselves cash advance loans. In other words, a cash advance loan is the exact same thing as a payday loan. These loans are set up so that you borrow money for a short period of time – usually until your next payday. The initial fee is high but reasonable, except that you probably can’t pay off the loan in full when it comes due. So, you roll the loan over to another pay period, paying yet another fee, and pretty soon, you have a large loan balance and a ridiculous annual rate of interest.
The different name doesn’t solve the problem.
By using the name “cash advance loan”, cash advance lenders are trying to get you to think of other loans that are known as cash advances.
A bank cash advance loan is designed to be an alternative to payday loans. Many banks and credit unions offer them to their customers. These are short-term loans for relatively small amounts of money, like a payday loan, but the rates of interest are much lower. The catch is that you have to have an existing relationship with a bank that offers these loans.
and credit unions offer them to their customers. These are short-term loans for relatively small amounts of money, like a payday loan, but the rates of interest are much lower. The catch is that you have to have an existing relationship with a bank that offers these loans.
And, some banks are getting out of this business because they are concerned about looking like payday lenders. They don’t want to be associated with that business, even if it means that they can’t offer their customers these short-term loans.
The other type of cash advance is a credit card cash advance. Most credit cards allow their customers to borrow cash without making a purchase. You can do this at the bank or at an ATM. The bank will charge high fees and interest, but these will probably be lower than the interest and fees on a payday loan. You may not be allowed to borrow a lot of money at once, though. Most ATM machines limit how much money you can take out on any given day. Some storefront lenders will allow you to borrow the full amount of your credit card cash advance in one transaction – for a fee, of course.
There are costs involved with borrowing money. That’s a fact. But some of those costs are much higher than they need to be. Payday lenders could offer a better product, but then they wouldn’t make as much money. They are hoping to fool you with a different name.
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