What Is a Cash Advance, and How Does It Work?
Unexpected expenses happen. When they do, the right cash advance can help you stay on track.
What is a cash advance?
A cash advance is a short-term, small-dollar financial solution that you typically pay back with your next paycheck.
There are different ways to get a cash advance. Earned wage access (EWA) products, credit card cash advances, and Cash Advance loans can offer you fast cash, but it's important to understand the differences before you decide.
How does a cash advance work?
Earned wage access
Also known as on-demand pay, earned wage access lets you tap into money you've already earned ... before payday.
The amount you can get is based on the hours you’ve worked, and repayment happens automatically when you get paid. Since you're accessing your own paycheck rather than borrowing, there's no interest, although some providers will charge a small fee.
Credit card cash advance
A credit card cash advance is tied to your credit card account. It allows you to withdraw money from your credit card at an ATM or bank anytime you need it. The amount you can borrow is limited to a percentage of the credit available on your card and will involve an extra fee.
You'll pay interest on the withdrawal plus a cash advance fee. Interest accrues until you repay the full balance on your next statement.
Cash Advance loan
You can apply for Cash Advance loans through an in-person or online lender like Advance America. Since you’ll need to repay the loan in full on your next payday, the amount you can take out depends on how much income you bring in.
➢ Related: How Cash Advances Are Changing
When to consider a Cash Advance loan
In an emergency
Sometimes, life throws curveballs. Maybe you're injured or the car needs repairs. Whatever the emergency, a Cash Advance loan could help you keep your finances on track.
Cash Advance loans are quick and convenient to apply for, making them great for urgent situations. Depending on your lender, you can even fill out and submit an application online.
Keep in mind, however, that Cash Advance loans are not offered in every state — and states that do regulate Cash Advances may set different borrowing limits. So, if your emergency costs more than a local Cash Advance loan can provide, you may need a different option like a Line of Credit or Installment Loan.
To prevent overdraft fees
If your bank account won’t cover your next bill, a Cash Advance can be a quick fix. You want to avoid going negative in your bank account because you’ll end up with overdraft fees and penalties.
If you need help paying for essentials
There may be times when you have limited funds and need necessities like groceries or need to pay your electricity bill. A Cash Advance loan could get you the money you need quickly. Some lenders even offer same-day* funding.
When you don’t qualify for traditional loan options
Traditional loan options often require a credit check. This is because the lender wants to ensure you’re financially responsible enough to repay what you borrow.
Since they’re short-term loans, Cash Advances don’t typically require you to have good credit. Instead, lenders consider your employment history and income to determine your ability to repay.
What can a Cash Advance loan be used for?
There are no restrictions on how you use advanced funds. Once the money is in your account, it’s yours to use as you need. Most people use Cash Advances for:
- Medical bills
- Vet bills
- Car repairs
- Home repairs
- Home appliance service calls
Cash Advance loans can also be used for essential monthly expenses like utility bills, groceries, or rent if you find yourself in a financial pinch.
Cash Advance loans from Advance America
Applying for a Cash Advance is an easy process that takes just a few minutes with Advance America. You don't need good credit to qualify, and you may even get the funds in your account the same day* you’re approved.
*Online approvals before 10:30 AM ET (M-F) are typically funded to your bank account by 5 PM ET same-day. Approvals after 10:30 AM ET are typically funded the next business day.
Cash Advance FAQs
Can I get a Cash Advance loan with bad credit?
Yes, you may be able to get a Cash Advance with bad credit because many lenders don’t focus solely on your credit. Instead, they’ll also look at your employment status and the amount of income you earn when deciding whether to approve you for a Cash Advance loan.
How much can I borrow from a Cash Advance?
Cash Advance loan amounts depend on your income and your lender’s state-regulated limits. Generally, Cash Advances can range from $100 to $1,000.
Is a Cash Advance right for me?
Before applying, think about your financial situation and weigh the pros and cons of getting a loan.
Used wisely, Cash Advance loans could help you avoid late fees, disconnected services, or other penalties if you’re not able to pay bills or other monthly expenses on time.
Notice: Information provided in this article is for informational purposes only. Consult your attorney or financial advisor about your financial circumstances.
About the author
Ashley Masiello is an experienced copywriter and editor who has crafted engaging content for numerous websites and continues to do so with Advance America. She likes to combine her creative personality with clarity to make concepts easy and fun to read.