What is a Cash Advance, and Can You Get One Online?
LOS ANGELES, March 23, 2021 (Newswire.com) - A cash advance is a short-term loan. The most common example of this is cash issued by credit card companies. Small-dollar loans are also considered cash advances, as are overdraft protection accounts from banks and credit unions.
These are all examples of short-term loans that can be classified as cash advances. They're a great option if you need immediate cash, but you'll likely have to pay interest and the money in most cases is due back quickly.
Can You Get a Cash Advance Online?
Even though you're not withdrawing cash, it's still possible to get a cash advance online. That's because cash advances are just a small-dollar loan, and you can receive that "cash" as a direct deposit as easily as you can receive it in greenbacks.
A paycheck advance loan, also called a payday loan, is a cash advance with a promise that you'll pay it back when you get your next paycheck. It's not a secured loan because you're not actually posting collateral, but borrowers are usually required to give their bank account information for direct debit of the repayment.
Merchant cash advances are for business owners who need operating cash. The promise to the lender, in this case, is based on the merchant's cash receivables. Similar to paycheck advance loans, merchant cash advances aren't secured, but bank account information will be required.
Online lenders offer different interest rates on cash advances, but payment terms are typically based on when the borrower expects a paycheck or payment from customers. With credit card cash advances, the amount taken is simply added to your monthly balance.
One drawback to credit card cash advances is that credit card interest begins to accrue immediately, with no grace period. This is a good reason to pay the balance off as soon as possible. Keep that in mind when you initiate the advance.
Bank and Credit Union Cash Advances
Most banks and credit unions offer cash advances through what is known as an "overdraft protection account." These accounts are actually providing short-term loans in cases where an account holder's balance dips below zero. It helps prevent bounced checks.
If your bank provides online access to your accounts, which mostly all of them do, you can transfer funds from your overdraft account into a regular personal or business checking account. Those transfers are cash advances.
Overdraft accounts are offered to customers with a history of maintaining positive balances. If you get into financial trouble, avoid using the overdraft account if you can. Keep it as a last resort so your troubles don't affect the good relationship you have with your bank.
Notice: Information provided in this article is for informational purposes only. Consult your financial advisor about your financial circumstances.
Source: iQuanti, Inc.