What is a Cash Advance Loan?
The term Cash Advance may mean different things depending on who you talk to. A cash advance could be similar to a payday loan5, it could mean borrowing cash from your credit limit using your credit card, or it could even be a loan from your employer deducted from your next pending paycheck.
Common Cash Advance Questions
Are Cash Advances safe?
Cash Advances like Payday Loans are often not recommended by financial advisors.
They typically carry very high interest rates (400% APR) and are offered for very short terms (two weeks)5. These high interest rates and short terms can make these cash loans difficult to repay. In fact, four out of five such cash advances are rolled over (extended for another term, at the cost of more fees and additional interest).
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Are Cash Advances bad for your credit?
Typically, taking out a cash advance will not have an impact on your credit score (unless you fail to repay it).
If you want to rebuild your credit history, an installment loan could be an alternative
solution for you! OppLoans reports payment history to all three credit bureaus. Credit reporting not available for all products in Texas.
How do cash advance loans work?
Typical storefront cash advances (also known as payday loans5) are usually two week loans secured by your paycheck. The lender has access to your bank account. The loan principal will either be electronically deposited in your checking account or you’ll get cash on the spot. However, repaying a short-term loan can be very difficult and often leads borrowers into cycles of debt.
With a typical credit card cash advance, you use your credit card to take out a cash loan. Your credit card statement will show the cash advance in much the same way that it would if you had bought something. You’re responsible for paying back the cash advance plus fees and interest. Unlike using your credit card for a purchase, with a cash advance you won’t get a grace period in which you don’t have to pay interest.