A Cash Advance Can Cost You Less Than Bank Fees

Posted on Thursday, September 10th, 2009 at 5:26 pm in Financial Planning, General Payday Loan Tips, Helpful Payday Loan Info, Miscellaneous Cash Loan Info

With the ongoing financial crisis, a lot of banks are raising their fees to help make up for some of the money they’ve been losing on bad mortgages and other unsuccessful investments. As usual, it’s the small customer who seems to be paying the price for the folly of the big players. When you bounce a check, for instance, it can now cost you even more than before. For this reason, you need to look at alternatives to paying steep banking charges, in addition to trying to manage your finances as carefully as possible.

Sometimes you simply can’t help it: there’s not enough cash in your account to cover those important utility bills that get debited automatically, or the checks you need to write for your children’s school supplies. But instead of writing bad checks or going overdrawn on your account, you should look at applying for a short-term cash advance to bridge the gap until the next time you get paid.

If you have a checking account, there’s a good chance that it comes with an overdraft facility. This might be in the form of a link to your savings account in the same bank. The bank ensures that you always keep a “float” in your checking account of, say, $300. The rest of your money is allocated to your linked savings account, where it can earn interest. Each time you withdraw money, use your debit card or write a check, the bank moves the necessary funds from your savings account into your checking account to make up for the amount that has been debited.

The other type of overdraft is where the bank guarantees to cover debits made when you don’t have enough in the account, up to a pre-agreed limit. You can normally only get this facility if you’ve been a customer for a while, and if your salary gets deposited directly into your account. With a guaranteed overdraft, you can end up paying steep charges if you overdraw even for a single day. These fees can make a cash advance look very reasonable in comparison.

Let’s assume that you make one ATM withdrawal and write three checks that you can’t cover, for a total of $300. Your bank might debit you $35 in non-sufficient funds (NSF) charges for each transaction, plus overdraft fees of $35 for each bad check. That would add up to $245, even if the funds arrive in your account the following day.

If you know that you’re going to be short of money, and make arrangements to get a $300 cash advance instead, you would be able to hold on to that money for up to 14 days and typically pay a fee of only $37.50 to $50. This is clearly a far better solution! Don’t forget also that overdrawing or bouncing checks will have a negative impact on your credit score, while a payday loan will not affect it at all.

Related posts:

1. Payday Loans Can Prevent Bank Fees
2. No more Overdraft Fees with Payday Loans
3. The Trouble with Overdraft Fees
4. Cash Advance Loan Borrowing Tips
5. Online Cash Advance Loans and Unemployment