Key learning points
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The most common type of online cash advances is a payday loan, which comes with high fees and APRs that must be paid with your next paycheck.
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Alternatives to cash advances, such as payday loan alternatives, early payday apps, credit card cash advances and buy it now, paylater plans, can provide more affordable options for obtaining money.
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Before resorting to an online cash advance, it is crucial to have a plan for paying back the money to avoid falling into a cycle of debt.
Whether your account is running low or you’ve maxed out your credit cards, an online cash advance can be a useful option to secure cash quickly.
Still, there are significant drawbacks to consider. These loans are expensive and have short repayment terms that can lead to a vicious cycle of debt. They should only be used as a last resort. Instead, consider more affordable alternatives.
How a cash advance works
Online cash advances are small, short-term personal loans or apps that allow you to receive part of your paycheck early. Most online cash advances are payday loans, because the entire balance plus fees must be repaid by your next pay period.
Borrowers choose online cash advances because they can get a small amount of cash quickly without a credit check. However, annual percentage rates (APRs) can exceed 600 percent, making this a risky and expensive way to borrow.
In most cases, an online cash advance product works as follows:
- Complete an online application: Check your name, address, date of birth and citizen service number.
- Provide information about work and income: This is the most important factor for getting a cash advance loan. Because credit isn’t taken into account, how often and how much you get paid determines how much you get approved.
- Give the cash advance company access to your bank information: Lenders will typically use this information to verify your payroll direct deposit for the past few months.
- View the conditions: Payday lenders should give you a detailed breakdown of how much you’ll pay, how long you’ll pay it for, and any required fees.
- Repay the advance: Most cash advance companies automatically deduct the amount you are advanced from your next paycheck. Payday lenders may allow you to extend or extend your repayment date.
Bank interest tip
Many payday consumers run into trouble with payday loans because they keep renewing them if they can’t pay back the full amount with their next paycheck. Consider a loan from a family member or a part-time side job like Uber or Lyft that pays out daily so you don’t stay in the payday loan cycle.
Alternatives to a cash loan
A personal loan for bad credit can offer lower rates and a longer repayment term than a cash loan. If you don’t qualify, financial technology companies now offer online cash advance products that are much cheaper than payday loans.
You may also have access to a cash advance on your credit card or the option to use a buy-now-pay-later plan.
Alternatives to Payday Loans
These loans may be advertised as alternatives to payday loans because they offer repayment terms of several months or even years, yet still allow you to qualify with little more than proof of income. In most cases, they can be financed just as quickly as personal loans.
However, they are not cheap. Most charge triple-digit APRs, much higher than other emergency loan options. Some require biweekly payments, which can put a strain on your budget if you’re already struggling to cover expenses between paychecks.
Check out the table below for the terms offered by alternative lenders for payday loans, as reviewed by Bankrate’s expert editorial team.
| Lender | APR range | Loan amount limit | Term length |
|---|---|---|---|
| NetCredit | 34.00%-99.99% | $1,000 – $10,000 | 6 to 60 months |
| OppLoans | 160.00%-179.00% | $500 – $4,000 | 9 to 18 months |
| TO GET UP | 60.00%-299.00% | $300-$5,000 | 4 to 36 months |
Early payday apps
The early payday app is a new twist on online cash advances. These apps offer a cheaper and in some cases no-fee alternative to payday loans. Approval is based almost exclusively on your salary and the way money flows in and out of your bank account.
You may be able to get early access to up to $750 of your paycheck. However, you may have to wait three to five days to receive your money, or you may have to pay a fee to receive your money immediately.
Many companies charge monthly subscription fees to use the service. Others ask for voluntary tips to be deducted from your paycheck when the advance is refunded.
| Payday advance app | Progress limit | Cost | Refund period |
|---|---|---|---|
| EarnIn | $750 |
|
Next paycheck |
| Daaf | $500 |
|
Next paycheck |
| Brigit | $250 | $9.99 per month | Next paycheck |
| Clover | $225 | Up to $16.78 for instant cash | Next paycheck |
| Authorize | $250 |
|
Next paycheck |
Credit card cash advance
If you have a credit card, see if you can get a cash advance. Most credit cards offer a short-term cash option. You don’t need to open a new account and may even be able to access the money at a local ATM.
However, read the fine print of your credit card agreement. There is usually a fee of 3 to 5 percent. Additionally, cash advances usually have a higher interest rate than regular purchases. Interest begins to accumulate immediately rather than after a grace period.
Buy now, pay later plans
If you need to buy something important between paychecks, a Buy Now, Pay Later (BNPL) plan can help you spread the payment. This can help you avoid turning to a personal loan to make ends meet. Some options may charge interest or other fees.
For example, if you have an unexpected car repair or an empty refrigerator, a buy-now-pay-later option can help you fix the car or stock your shelves. You then have four to six weeks to repay the costs. Failure to pay can hurt your credit score.
A recent survey from Bankrate BNPL found that more than a third of American adults (39 percent) have used at least one of these services. A BNPL plan may be a good option if you’re among the 14 percent of Americans who didn’t apply for a new credit card between March 2023 and March 2024, a separate Bankrate survey found.
it comes down to
When faced with financial problems and the need for quick cash, many turn to online cash advances, also known as payday loans. The high cost of APRs and quick repayment terms can lead to a cycle of debt.
Alternatives to cash advances, such as payday loan alternatives, early payday apps, credit card cash advances, and buy-now-pay-later plans can provide more affordable options.
