Taking out a cash advance loan can seem like an easy fix when you need money fast. But the convenience comes at a steep price. Cash advance loans carry fees and interest rates that can lead to a cycle of debt if you’re not careful.

This comprehensive guide will explain what cash advances are, how their fees work, and most importantly—tips to avoid expensive charges so you can use them responsibly.

What Are Cash Advances and How Do They Work?

A cash advance is a short-term loan that gives you immediate cash in exchange for high fees and interest. Other common names for cash advances are payday loans, check advance loans, or deferred deposit loans.

Here’s how they work:

  • You provide a post-dated check or debit authorization for the amount borrowed plus fees
  • The lender advances you cash immediately
  • The full loan amount is due to be repaid on your next pay date (typically two to four weeks)
  • If you can’t repay the loan in full, you can “roll it over” into a new loan, extending your due date but also incurring new fees

Cash advance loans appeal to borrowers because getting cash is quick and convenient. Unlike traditional loans, there’s usually no credit check. However, the fees mean that cash advances should only be used as a very occasional, last resort option.

Cash Advance Fees: What Are You Paying?

The fees charged for cash advances make them an expensive way to borrow money. Fees are how lenders make their profit from these high-risk loans.

Typical fees include:

  • Interest rate: This is a percentage charge applied to the loan amount. Rates often exceed 300% APR.
  • Service fee: A flat fee such as $10 or $20 per every $100 borrowed.
  • Rollover fee: If you extend or “roll over” your loan, you’ll pay this fee in addition to new service fees.

To understand the true cost, you have to look at the fees for the entire loan term. A $100 loan repaid in two weeks with a $20 service fee per $100 borrowed would equal a 520% APR!

And that’s if you pay it back immediately. Things get much worse if you have to roll it over.

Now that you know how expensive cash advance fees are, here are tips to avoid them:

1. Exhaust Other Options First

Cash advances should only be a very last resort. Before applying, make every effort to get the money you need from:

  • Friends or family
  • Employer advance on your paycheck
  • Traditional loan with lower interest rate
  • Credit card (preferable to cash advance fees)
  • Payment plan with creditor
  • Community groups and nonprofits providing assistance

If these options aren’t viable, then proceed with caution using the following tips:

2. Borrow Only What You Need

Don’t take out extra money “just in case.” Fees are charged on the full loan amount, so borrowing $200 when you only need $100 costs you twice as much!

Before applying, document exactly what the cash will be used for and borrow that exact amount.

3. Compare Lender Fees

Not all cash advance companies charge the same fees. Compare quotes from multiple lenders so you get the best terms. Look at:

  • Interest rates
  • Service fees
  • Any penalties for early repayment

Online lenders tend to have lower rates than storefronts. Don’t decide based on who can approve you for the largest loan!

4. Have a Realistic Repayment Plan

The biggest mistake borrowers make is being overly optimistic about when they can repay the loan. When estimating your ability to repay, be brutally honest with yourself. Account for:

  • The exact date you will receive income
  • Any outstanding bills due before payday
  • Leeway for unexpected expenses

It’s better to plan for the worst-case scenario than roll over the loan. Speaking of which…

5. Avoid Rolling Over the Loan

Rolling over or extending your cash advance should be avoided at all costs. Why? Each renewal means you pay the service fee again! One $100 loan rolled over three times means you pay four service fees, not just one.

Make the repayment plan (tip #4) realistic so you can fully pay by the due date. Don’t keep extending. If you know you can’t pay in full, discuss other options with the lender right away (see tip #8).

6. Pay Down the Principal

Making payments toward the loan principal is one of the smartest things you can do. Paying ahead reduces the balance accruing interest, helping you become debt free sooner.

Even small principal payments make a difference. When possible, pay a little extra toward the principal to bring down your total fees.

7. Build up Savings

Once your cash advance is paid off, build up an emergency fund in savings. This protects you from needing another cash advance for the next surprise expense.

Aim to eventually have 3-6 months of living expenses in savings. Put aside a little from each paycheck until you reach this goal.

Emergency savings let you cover unexpected costs without dangerous debt.

8. Communicate Openly With Your Lender

Reputable lenders don’t want you trapped in debt either. If you don’t think you can pay on time, immediately discuss options other than roll over. For example:

  • Partial payment
  • Lower late fee
  • Brief extension for portion of balance

Explain your situation honestly and ask for their recommendations. They may offer alternatives you didn’t know about. The worst thing you can do is ignore the issue until it’s too late.

Key Takeaways

Avoiding excessive fees on cash advances comes down to borrowing less, planning realistically for repayment, and reducing your reliance on them in the future. Keep these core tips in mind:

  • Only use cash advances as an absolute last resort
  • Shop around and compare fees between lenders
  • Borrow only the amount you explicitly need
  • Have a realistic plan to repay by the due date
  • Pay down principal early whenever possible
  • Build up savings to avoid future shortfalls
  • Communicate concerns early to avoid rollovers

Used carefully, cash advances can help weather difficult financial periods. But discipline and restraint are vital to avoid dangerous debt spirals. Follow these tips to minimize fees and use payday loans constructively rather than destructively.

Frequently Asked Questions

1. Are all cash advance fees the same?

No, fees vary widely by lender. Interest rates range from 200% to over 600% APR. Service fees are a flat amount charged per $100 borrowed, usually $10-$30. Always compare quotes from multiple lenders.

2. What happens if I can’t repay my cash advance on time?

You can ask for an extension from the lender but this involves additional fees. Avoid this by having a realistic repayment plan and paying down principal early. Communicate with the lender as soon as possible if you anticipate issues repaying on time.

3. How fast can I get a cash advance?

One advantage is they provide very quick access to cash, often in as little as 24 hours once approved. However, the quick money comes at a very steep long-term price.

4. Where can I get a cash advance loan?

You can apply at storefront lenders or online lenders. Online lenders often offer better rates and terms. Ensure the lender is reputable and licensed in your state.

5. Should I take the maximum cash advance amount offered?

No! Only borrow the exact amount you need. Fees are charged on the total loan amount. Borrowing more than needed costs you more in fees.


Cash advances provide immediate funds when you’re faced with an emergency expense or cash shortfall. But irresponsible use can lead to an uncontrollable spiral of high fees and debt. Use the tips in this guide to borrow only when absolutely necessary, minimize fees, and repay cash advances responsibly. With prudence and discipline, you can occasionally use them constructively rather than destructively.## Evaluating Your Need for a Cash Advance

Before rushing into a cash advance, carefully evaluate whether it’s absolutely necessary or if alternatives exist:

  • Make a budget – Review income, expenses, and outstanding debts to understand your full financial picture. Can you cut back on discretionary spending anywhere? Are there upcoming bills you forgot about? A budget helps assess if the shortfall is truly unavoidable.
  • Consider payment plans – For expenses like medical bills or car repairs, ask the creditor for a payment plan to spread costs over time. Many will work with you if they know you’re facing a temporary hardship.
  • Ask for help – Don’t be afraid to ask family, friends, churches or nonprofits for assistance. Offer to do work, like yardwork or housecleaning, in exchange for cash if needed.
  • Review assets – Do you have anything of value you can sell to generate funds, like electronics, musical instruments, tools, jewelry, or sports equipment? Even small possessions sold online can generate helpful cash.

If these options simply aren’t viable or sufficient, proceed to minimize cash advance fees using the tips in this guide. But explore every alternative first, as high fees should be a true last resort.

Understanding the True Cost: An Example

Let’s look at a realistic example to demonstrate how cash advance fees add up:

John needs $500 unexpectedly to repair his car. He takes a $500 cash advance with a $20 service fee per $100 borrowed. This equals a $100 service fee. The biweekly interest rate is 10%, or 260% APR.

In two weeks when the loan is due, John owes:

  • Original loan amount: $500
  • Service fee: $100
  • Two weeks of interest (10% biweekly): $50
  • Total due: $650

Because of the fees, John pays $150 for a $500 loan. If he can only repay $200 in two weeks, the loan would roll over with new service fees assessed. Just a single roll over brings the total fees near $300.

This example shows how deceptively expensive short-term borrowing can become. Always account for all fees over the full loan term in assessing cost.

Raises and Bonuses: Plan Ahead to Avoid Needing Quick Cash

When you receive extra income like a seasonal bonus or raise at work, it may be tempting to overspend on wants rather than needs. But discipline yourself to use these occasional income boosts to get ahead financially rather than falling back.

  • Make a plan – Before the funds arrive, earmark how you will use the money wisely. Pay down debts, increase savings, or set aside for anticipated expenses.
  • Pay outstanding loans – If you have a cash advance outstanding, put bonus funds toward paying it off early. This saves on continuing fees.
  • Start an emergency fund – Open a dedicated savings account and make regular automatic transfers from each paycheck until you have 3-6 months of reserves.
  • Don’t raise your standard of living – Avoid “lifestyle inflation” where you inflate spending whenever income rises. Keep living below your means.

With a plan in place to use bonus income constructively, you can avoid needing quick cash from loans with high fees down the road.

Alternatives to Cash Advances

Cash advances should be an absolute last resort after you’ve exhausted all other responsible borrowing options, such as:

  • 0% APR credit card – Transferring a balance to a 0% APR card avoids interest until the card’s promo rate ends.
  • 401k loan – You can borrow up to half your 401k balance for 5 years at low interest and repay via payroll deduction.
  • Employer advance – Some employers will advance a portion of your paycheck which you then repay in installments.
  • Personal loan – An installment loan from a bank or online lender offers lower rates, predictable payments, and longer terms.
  • Home equity line of credit (HELOC) – Tap available equity in your home at lower interest rates compared to cash advances.
  • Family/friends – Ask loved ones for a benevolent loan at little or no interest, which prevents fees. Offer to complete chores or share skills in exchange.
  • Nonprofit agencies – Organizations like United Way may offer low or no interest microloans along with financial counseling.

Prioritize these options first before considering the high fees of cash advances for short-term funds.

When Cash Advances Can Make Sense

Despite the risks, are there times when cash advances may still be your best available option? In certain rare cases, the answer is yes – but only after very careful consideration.

Potential situations where cash advances could be reasonable as a last resort:

  • Facing eviction or foreclosure – If paying late isn’t possible, a cash advance fee may still be less expensive than losing your home.
  • Repairing your vehicle – If the repair is your only way to commute to work, it may be worth the cost. Compare to fees like towing and rental cars if you can’t use your vehicle.
  • Avoiding lapses in medical care – For life sustaining medications or treatments, paying fees may be necessary. But first explore free/reduced cost resources.
  • Emergency travel – If a family emergency requires sudden travel the cash advance fee may be justified for flights and other costs if no other options available.

Even in these situations, take steps to minimize fees and have a realistic repayment plan. While not ideal, a cash advance may beat alternatives like eviction, job loss, or lapses in medical care. But all other responsible borrowing options should be exhausted first.

When to Avoid Cash Advances

In contrast, there are also plenty of situations where cash advances should be completely avoided:

  • Discretionary purchases – Cash advances should not be used for shopping, entertainment, vacations, or non-essential expenses.
  • Recurring bills – Ongoing expenses like rent, utilities and credit card bills should never be paid with cash advances. These indicate a budgeting shortfall needing a long term solution.
  • Existing debt payments – Paying a credit card bill with a cash advance just shifts high interest debt somewhere else.
  • Gambling – Many lenders don’t permit borrowing for gambling as it’s unlikely to solve financial problems.
  • Investing – No investment opportunity is worth the exorbitant cost of cash advance fees.

Beware of circumstances where taking a cash advance seems convenient but is actually very high risk. Only use them as an extremely temporary solution to a sudden, unexpected financial crisis.