What Exactly is a “Cash Advance”?

You’ve seen the commercials on television, and the banner ads on the top of your favorite websites, but they don’t give you any details about the cash advances they offer. What is a cash advance? How does it work? It’s actually surprisingly simple.

A cash advance is what it sounds like – an advance loan, in cash, directly to you. You borrow against your next paycheck, and pay the money back when you get paid. People use them primarily to pay bills when they don’t have the money right now, but will have it next week.

How does it work? You go to an online cash advance website and fill out an application form to receive your loan. The first time you apply, you can borrow up to $300 against your next paycheck, but make sure your paycheck will be at least $300 so you can pay your loan back in full. The amount you can borrow depends on how much you make in a month. In order to qualify for a loan, you need to have had the same job for a year, and make at least $1000 a month. If you fit that description, you pretty much already qualify. No credit checks are required, so regardless of your credit score, you can almost always get your loan. The money is transferred directly into your checking account on the next business day, so you can get your money fast and easily.

Cash advances, also called payday loans, are not free, unfortunately. The fee is based on how much money you borrow, and must be paid back when the loan is paid back in order to maintain the minimum fee. If you need a payback extension, more interest is charged. Borrow wisely, only as much as you can afford to pay back with your next paycheck (including the interest payment), and pay it all back as soon as you can. You’re not making a profit, but a cash advance can save you late fees and help protect your credit score.


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