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Cash Advance

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Cash Advance

What You Need To Know About Cash Advance Stores

Cash advance stores are present in many different locations across the nation where many unsuspecting individuals wander into their stores looking for financial relief and many finding them in a worse financial situation fairly quickly. Cash advance stores are one of the most controversial businesses of the last twenty years, with supporters claiming that they provide an essential service that is needed by the lower income community and opponents claiming that the businesses prey on the people that can least afford it.

Cash advance stores can generally be found where the population is less affluent because here is where most of the people that seek out their services can be found. At first, many cash advance stores opened near military bases because the majority of the individuals in the area were living on low military wages. A great deal of service members fell into an endless cycle of debt due to constantly receiving cash advances and a new law was passed prohibiting cash advance stores from giving a cash advance to members of the military. This law does not stop the cash advance stores from giving a cash advance to any other member of the nation as long as they have a valid ID and can produce a paycheck stub.

The biggest issue associated with a cash advance is the interest rate that is charged for these short-term loans. The interest rate associated with a bank loan or credit card is between 5% and 10% annually. For people with low credit scores or a shaky credit history, the interest rate for a credit card may be as high as 28%. The interest rate charged for a two week loan from a cash advance store averages between 400% and 800%.

Many of the individuals obtain a short-term loan from a cash advance store get trapped into an endless cycle of debt, where they are taking out another loan to pay off the current loan due to the two week payback period. Many of the people that rely on a cash advance to pay for emergencies are already living paycheck to paycheck and use the cash advance stores because they believe that have no other options available. Unfortunately, when the two week period is up they are unable to pay off the entire advance without suffering financial hardship, so they take out another cash advance for slightly less or slightly more so that they can make it through the next pay period.

It is estimated that the person using a cash advance store averages more than 7 cash advances each year, with the majority of the cash advances occurring one after another. This indicates to researchers that a many of the people that rely on cash advances are unable to repay the original amount within the time period determined by the company and have to take out a subsequent cash advance, either from the same location or from a different company, to cover the charges for the last cash advance. In this way, many cash advance recipients find themselves paying a great deal of money in fees to the company with very few options for getting out of the cycle.

Many experts agree that cash advances are not a good idea for a significant percentage of the population and that the interest rate is ridiculous for the services provided. There are

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