3 Types of Cash Advance: How They Work

What is a cash advance and how do they work?

A cash advance allows you to receive small and short-term financing without long wait times. The approval process is easy. Cash advances are great for covering unexpected expenses and have three types: credit card cash advance, merchant cash advance, and a payday loan. Let’s discuss them in detail. 

Cash Advance and Its Types

This short-term financing called cash advance is often issued by a credit card company. As a rule, it comes with high interest and fees. A cash advance is ideal for those who need quick access to financing. The application is hassle-free and often doesn’t require a credit check. Below, you can find the three types of cash advance:

  1. Credit Card Cash Advance 

A credit card cash advance is typically issued by your credit card issuer. This type of financing is withdrawn against your credit card limit and lets you borrow against your credit. You can withdraw it from an ATM as well. The interest will make up an average of 24%, which is almost 9% higher as compared to the average APR for purchases.

  1. Payday Loan 

A payday loan allows you to receive upfront money against your coming paycheck. This type of short-term borrowing is offered based on your income. The provider will charge you based on a percentage from your next salary, and you’ll be required to repay the amount when you get your pay along with interest in one lump sum.

This type of funding ranges from $50 to $1,000. The fees are about $15 per $100 borrowed or higher, and the interest rates exceed 100%.

  1. Merchant Cash Advance or Business Cash Advance 

A merchant cash advance (MCA) is also referred to as a business cash advance. It allows merchants to cover immediate expenses. This isn’t a loan: it’s simply a sale of your future earnings until the debt is paid off. The interest is high. However, an MCA can help you receive quick financing without difficulty so you can get out of a financial crisis. 

To get a reliable and cheap merchant cash advance, consider turning to a reputable alternative online lender in the U.S. A respected alternative online lender will easily approve you for an MCA and guarantee the cheapest possible rates. 

Types of a Cash Advance and How they Work 

Though a cash advance comes with higher rates and fees, it’s worth getting this type of financing. Cash advances are a great and convenient way to cover unexpected expenses through quick financing. 

Author Bio: Michael Hollis is a Detroit native who has helped hundreds of business owners with their merchant cash advance solutions. He’s experimented with various occupations: computer programming, dog training, accounting… But his favorite is the one he’s now doing — providing business funding for hard-working business owners across the country.