Cash Advance Loan

A cash advance loan is taken out against a line of credit or credit card, usually at a higher rate of interest. Cash advances are different from regular credit card purchases as there is seldom a grace period when interest isn’t charged and they are more expensive than most other forms of debt financing. Having no grace period, the loan begins accruing interest immediately, even if you pay it off before it’s due. Besides the larger interest rate, there is often a fee involved as well, usually a certain percentage of the total cash advance amount.

The maximum amount of the cash advance that the borrower may take at one time is usually a portion of his or her overall credit limit. The cardholder’s credit card statement is then usually broken down into two sections, one for his regular credit card purchases, and one for the cash advance. Often times credit card companies will send checks to their cardholders to make it easier for them to initiate a cash advance. They will also use a small promotional rate, sometimes even 0%, for a fixed period of time in order to entice cardholders to take out a cash advance.

Besides the previously mentioned checks, the borrower can usually take his credit card to an ATM or to a teller at his bank in order to take out a cash advance. Keep in mind, however, that ATMs will often tack on yet another fee. If the cardholder requests an amount over his limit sometimes he will still get the money but will be responsible for over limit fees on his credit card and still be responsible for paying it all back.

There are many situations where it would not be rational to take out a normal bank loan to cover certain expenses and therefore this makes the cash advance an excellent solution to these types of problems. Unexpected expenses occur often in our lives and not all places accept credit cards. When you simply do not have the funds in your bank account to cover these expenses, cash advances prove very handy.

Cash advances can be expensive however, due to the very high interest rate and fees associated with them, so be sure to explore other possibilities before committing yourself to one. At any rate, make sure to borrow only as much as you need to cover your current expenses and get you to your next payday.

Payday advance loans are often referred to as cash advances as well, although there are some slight differences between the two. Payday advances usually do not require a credit check and the amount you can borrow at one time is usually the amount of your next paycheck.

Cash advances are fine for the occasion when you need cash to cover a surprise bill and you simply do not have it. However, if you find yourself in a constant cycle and dependant on these cash advances to get by, please consider debt counseling as a more permanent solution to your problem.