Industry Facts
Cash advances provide affordable and convenient access to credit that helps approximately 19 million hardworking families annually to cover unexpected expenses or manage short-term financial challenges. Our customers tell us they are satisfied with the service we offer and use it responsibly.
- About 70 percent of our customers choose cash advances for convenience
- Customers also choose cash advances because they are cost-competitive and effective. 84 percent of customers say a cash advance helped them with an unexpected expense, and approximately three quarters reported that an advance helped them avoid other fees
- Approximately 92 percent of customers say a cash advance is a useful service
- 90 percent are satisfied with their understanding of the terms and costs of an advance
- State regulators report very few complaints: among nearly 11 million transactions, Advance America responded to less than 100 customer complaints filed with state agencies in 2009
Our customers choose a cash advance because it is cost-competitive, transparent and highly regulated. Customers know a cash advance can be the least expensive option, particularly compared to the high cost of bank and credit card fees, or paying late fees on a utility bill.
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Cash advances are also highly regulated on the state and federal level. In addition to complying with the provisions of the Federal Truth in Lending Act and several other federal laws, 37 states and the District of Columbia have approved regulations on our industry.
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Advance America and other members of the Community Financial Services Association (CFSA) represent more than half of all cash advance locations nationwide. These member companies must abide by a set of Industry Best Practices that encourage responsible industry practices and provide consumer protections, including an Extended Payment Plan, an option to repay an advance over a longer period of time, at no additional charge; truthful advertising; and fair collection practices.
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In addition, various independent studies of short-term credit have found:
- Eliminating cash advances does not eliminate the need for short term credit. Over-regulation causes consumers substantial economic and personal difficulty by limiting access to credit. – "The Case Against New Restrictions on Payday Lending," Todd J. Zywicki, George Mason University, 2009
- Cash advances are cost-competitive. Banks assess a median overdraft fee of $27 on customer checking accounts. This translates to an APR of 3,500% for a customer who overdrafts their account by $20 and repays within two weeks.– "FDIC Study of Bank Overdraft Programs," Federal Deposit Insurance Corporation, 2008
- Nearly 90 percent of cash advance customers are either very or somewhat satisfied with their advance. Borrowers also make informed choices. About half consider other credit options before choosing a payday loan. - "An Analysis of Consumers’ Use of Payday Loans," Gregory Elliehausen, George Washington University, 2009
- Cash advances are not a form of predatory lending. In fact, loans enhance the welfare of households by reducing credit delinquency rates. Furthermore, residents of Georgia and North Carolina bounced more checks, filed more bankruptcies, and had more complaints about lenders and debt collectors after those states banned cash advances. – "Defining and Detecting Predatory Lending" and "Payday Holiday: How Households Fare after Payday Credit Bans," Federal Reserve Bank of New York, 2007
