Understanding Cash Advance Fees
As mentioned, cash advance loans often come with exorbitant fees. Make sure that you carefully read your loan terms to see how much you’ll pay for each fee below:
Cash advance APR: Cash advance terms include a separate, often higher APR than credit card purchases or balance transfers. The average cash advance APR is 24%-roughly 9% higher than that of normal credit card transactions. Furthermore, the absence of a grace period means that the interest will begin to accrue right off the bat.
If you take out a payday loan, the interest gets even worse. You may face an APR of a whopping 400% or higher.
Cash advance fee: Credit card companies often charge a cash advance fee, which can either be a flat rate or a percentage of the amount requested. A credit card issuer will typically charge 3% or 5% of the total amount for these transaction fees. A payday lender may charge a $15 fee for every $100 borrowed.
Bank or ATM fee: Wherever you take the money from, you’ll have to pay a fee for withdrawing a cash advance.
Requirements for an Online Cash Advance
- Source of income
- Checking account details
- Social Security Number
- Government-issued ID
- Valid home address, phone number, and email address
You also need to make sure that you meet state regulations. For example, most states require lenders to be 18 years old, but the state of Alabama set its minimum age at 19.
While cash advance loans won’t directly affect your credit score if you repay them on time, they can indirectly impact it in other ways.
For example, taking the advance with a credit card will raise your outstanding balance, which will then raise your credit utilization ratio-a critical figure in calculating your credit scores. Plus, high interest rates can make it harder for you to make your monthly payments on time, which will harm your credit.
When Should You Use a Cash Advance?
More often than not, relying on cash advances will cost you more money in the long run. Sometimes, though, you may crunch the numbers and determine that it’s the least expensive way forward.
You also may find yourself backed into a corner with no other option. For example, maybe you took a taxi and discovered upon reaching your destination that the cab driver won’t take your credit card.
In any event, a cash advance loan makes the most payday loans New Hampshire sense when you know that you have the money to pay it off as soon as possible. If repaying it would take you a while, avoid the short term loan, or else the interest will pile up every day until you pay it off.
Can You Get a Cash Advance Online with Bad Credit?
While a lender may check your credit when drawing up the loan terms, you typically don’t need a high credit score to receive a cash advance. Lenders often consider other information instead, like state regulations and your paycheck amount, in the case of payday loans.
That said, you may wind up paying higher interest rates depending on your credit score, so you should be prepared for that possibility.
Alternatives to Cash Advances
Given all the fees involved, a cash advance may not be the best choice for you. If you can, try one of these alternatives:
As long as you have a bank account, you can secure personal loans from your bank. The higher your credit score, the more cash you’ll be able to access. To repay the loan, you’ll pay each month over the next few years at a much lower interest rate than the APR your credit card company would charge you.