Cash Advance Consumer Benefits
Posted on Monday, August 30th, 2010 at 9:54 am in Helpful Payday Loan Info, Miscellaneous Cash Loan Info
Cash advances and payday lending thrive in a bad economy. Payday lenders give cash-strapped consumers a fast and accessible credit alternative regardless of a good or bad credit score. In a suffering economy, cash advances make credit available to consumers who have few other alternatives due to a poor financial record.
Cash advances get a bad rep for high interest rates and predatory lending. In reality, payday lenders provide a valuable and affordable short-term credit service to customers from all economic backgrounds. In a tanked economy, some months can be harder to survive financially than others. Cash advances can bridge the gap in the hard times to make it easier for customers to keep their finances on track and pay their monthly bills on time.
Consumers with bad credit are left with few options for getting by in the tough months. Many overdraw their bank accounts to pay their bills that are due before payday, while many others wait to pay their bills late with their next paycheck. Borrowing a $300 cash advance to pay your monthly bills may cost you an annual percentage rate of over 500%. Overdrawing your bank account by the same amount to pay your bills on time can cost you an APR of well over 1,000%. For an individual with bad credit and few borrowing options, which looks like the better deal?
Cash advances can save a consumer’s credit score. Some people with bad credit will risk maxing out their credit cards for large or emergency purchases. Repeatedly going over your credit limit further damages your credit report and creditors will usually increase your interest rate as a penalty. Borrowing cash advances for emergency spending and big purchases instead will negate the risk of going over your limit and can improve your credit score when you pay your lender back on time.
Cash advances are more costly than bank loan services that base approval on credit scores. But for consumers to whom no additional credit is available, cash advances and payday loans can result in significant savings over the spending alternatives.
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