Cash Advance

What is a cash advance?
Cash advance can be defined as the process in which one can obtain an immediate loan from his credit card issuer. The detail of this amount is maintained in his account as a separate outstanding balance and interest is charged from the date of its receipt to the actual day of repayment. Some companies charge a processing fee based on the amount of advance taken along with a higher rate of interest.

Thus it can be defined as a personal loan (something ranging between $200 to $500) that can be availed to cover emergencies like hospital bills, mortgage payments or car payments.

However, to avail the cash advance service one must fulfill the following criteria:
• The requestor must be at least 18 years old.
• Must be an earning member.
• Must earn more than $1000 (take home); though this amount varies from one bank to another.
• He/she must have a savings account with the bank. 
• The details of the workplace including the office phone 

number and the email address along with the residence mailing address must be provided.

In today’s world of plastic money, cash advance is an option provided to the users by which they can take a loan from the bank against their current balances. In most of the cases the amount of cash available to the consumers is only a small percentage of their total credit limit. The bank generally provides two sets of numbers in their statements, the credit limit and the cash advance limit.

Getting a cash advance is just a matter of a few minutes - the user can go to the nearest ATM and withdraw the required amount with the help of his credit card. Provided that the amount requested for does not exceed the current cash advance limit given by the bank, the ATM or any other banking electronic device should not have any problem in giving out that money. If the requested amount exceeds the limit, the ATM does provide the currency but electronically flags the account. 

Though credit cards and debit cards are accepted almost everywhere, there are still a few service providers who prefer direct cash method. In such cases, the cash advance facility comes in handy. Even in emergencies, the best method is to take a cash advance from the bank against the credit card balance. 

In spite of all these advantages, it must be remembered that opting for a cash advance facility can prove to be expensive. The borrowed money is added to the account of total money owed to the bank which invites high interest rates and other financial charges. The interest rates can soar as high as 23% at times, thus reducing or even nullifying the advantages of cash advance. So it is always prudent to borrow enough money required for the situation and repay the cash advance at the earliest.

In a typical situation, there are no credit checks, income verifications and asset evaluations that are performed while a cash advance loan is being given to the requestor. The person lending money takes a big risk by not checking the credit report of the person. However, the banks do a credit check to verify the “credit risk” of a consumer before approving and issuing the loan. 

It is always better to get a cash advance loan instead of taking a debt for a requirement. Unlike a debt, cash advance does not have a specific time for repayment which means no monthly EMIs. This is a major advantage of a cash advance and hence preferred by certain businesses and plaintiffs who are looking forward to some unfinished legal claims and settlements.

A cash advance loan is often a much better way for a person or business to obtain capital because they are not taking on debt. Obtaining debt means that a business must have the obligation to pay interest payments on a regular basis which may be difficult for a business that does not have the ability to have steady cash flow. A cash advance means that not monthly payments are due and that the advance has no pre-determined time when the principle must be repaid. 

The Deferred Presentment industry more commonly known as the cash advance or pay day loans is one of the fastest growing sectors in today’s consumer finance industry. Over the past few years, most of the governments have tried to maintain a regulatory environment that satisfies this huge consumer demand for the quick, short term and low denomination loans. The State policy makers have tried to create a balance between the finance industry and the essentials consumer protection laws to ensure that both enjoy the benefits of the product. This is why there are hundreds of satisfied clients all across the globe that enjoy savor the convenience and economical benefits from the pay day or cash advance services without any hassle. It is expected that the customers understand the product and utilize the services rendered responsibly. The situation can be compared to that of a commuter waiting for a cab. Just as the commuter realizes that this taxi service is convenient for short term travels, the client availing the cash advance facility must understand that this service is useful and economical for short term financial needs – thus this acts a financial taxi for the middle-class when there is an unexpected financial crunch. The alternative arrangements available in the market include pawn loans, bank overdraft protection, paying penalty for late fees and others. All these options are much more expensive than the cash advance facility. 

How does this method work?
The requestor writes a personal check for the loan amount along with the service or other finance charge that ranges from $10 to $35 for every $100. The money is given to the client but the check is not deposited in the bank until a future date which typically ranges between two to four weeks. The process requires a few documents like bank statements, a recent pay check and drivers license.