Cash Advance
Cash Advance is a short term loan taken from banks or any other lenders. These have very high interest rates or fees, but still, look enticing to the borrowers because of its quick approval and easy funding.
Types of Cash Advances
A cash advance is a broader term with its several types that are known in the market. But, the major and most famous types of cash advances are as follows: -
1. Credit Card Cash Advance is the most common kind of cash advance where borrowing can be done through a credit card. Here you can withdraw the cash from an ATM or through a check that is to be deposited in the bank.
2. Payday Loans are short-term cash advances where a little amount of money is lent, usually between a range of $200 to $1500. In this kind of cash advance, borrowers paycheck is taken into consideration instead of checking his/ her credit score.
Cons of Cash Advances
Though cash advances are one of the most popular types of loans in the market, it is still known for affecting the ability to pay back loans. This is because these loans come with extensively high-interest rates and often results in borrowing new loans in order to repay the existing ones.
Alternatives to cash advances
It is always better to choose an alternative to cash advances to avoid their high-interest rates. The alternatives are:
- Consider borrowing from friends and family rather than going for such loans.
- A checking account overdraft can even be a better option than these.
- Create your own savings and stop depending on borrowed funds.