Instant Cash Advance
“Instant Cash Advance”—
typically refers to two kinds of financial products: cash advance apps (also known as earned wage access), or the good old fashion credit card cash advance. You’ve probably seen many cash app commercials recently targeting younger adults that have yet to reach full earning capacity and can be more impulsive with their money. Take, for instance, the Brigit commercial that asks, “feeling in a tight spot?” as they show a young man stuck inside a vending machine. He simply downloads the app, applies for cash, and instantly he has newfound funds. He borrows $150, and for what, as they next show him outside the vending machine (no longer trapped), sitting at a table loaded with junk food he got out of the machine with his new money.
I wish I could say this is the dumbest commercial in this arena, but we are inundated with so many more. Oh, how about the young lady sitting at home applying for a cash advance on her paycheck stating it’s her money, and she wants it now. Well, yes and no. It’s an advance on wages you’re expected to earn, and you have 1-3 days to pay it back, or else! You see, while instant cash advances typically have APRs from 24.99% to 35.99%, payday loans can reach heights of 391% to over 600% when fees are added in.
So, now you may be thinking a credit card advance would be a better choice. But be careful as the interest rate for this is higher than it is for purchases typically.
And it starts accruing interest immediately, unlike a purchase that has a grace period. Don’t forget the upfront fees that may be a percentage (3%-5%) or a flat minimum fee, whichever is greater.
Look, I could go on and on about all the costs and problems these types of loans can and do incur. But it’s up to you to do your homework and learn what all the costs are with whatever loan you’re looking at getting. And what are the consequences when you find yourself short on funds again next month. Like the one commercial where the husband and wife are in the kitchen paying their bills, and the wife says we’re short on funds to cover all the bills. Then they download an app, get cash, and pay off the remaining bills. They feel good about paying off all the bills as we all would. But how are they going to pay next month’s bills that now include an additional payment they didn’t have this month?
We Americans still need to learn our lesson as I’ve spoken with friends in different parts of the world, and they have stated how troubling these loans are. In fact, cash apps are not allowed in the UK, Australia, Mexico, and many other countries. You must have a US address and phone number, and you must be physically within the US to access and create an account.
What does that tell you?
Here are some alternatives to an instant cash advance to consider:
Before using an instant cash advance, explore these potentially less costly options:
Talk to Your Employer
Request Bill Extensions
Nonprofit and Community Assistance
Small Personal Loans
Please use extreme caution when looking at any loan as they do provide short term support, but most likely come with long-term issues that can be costly.
Happy Thanksgiving to you all!
BTW, you won’t need a loan to buy my book as a gift. www.moneymindsetmedia.com.
Bill Haase
OUR MINDSET ON MONEY
It’s Easy to Control, So Why Don’t We?
Money controls most of us, and I’ve been wondering why we let this happen. This book dives into how we can gain control of our money and therefore enjoy more of what life really has to offer. It is not about what to do with each and every dollar we make as it is more about our relationship with it. Money affects us from birth to death and yet we’re taught that it’s taboo to talk about it. And therein lies the rub, if you aren’t supposed to discuss it then how are you ever going to learn about it and take control? In these pages you’ll learn about the many financial challenges that you will face at some point in life, and you’ll be better off knowing what to expect and how you can then choose to deal with it. In other words, how to take control.
There’s an old saying I believe in that states “If you want to understand what’s going on, then just follow the money.” Problem is, most of us can’t.
It’s not your fault, we’re not supposed to talk about it, and we’re not taught anything in school and rarely at home. As a financial advisor I learned that most spouses rarely talk about two things, money and sex. When I’m in front of groups I would say that I’m here to help you with one of those. But the reality is that if spouses aren’t talking about money, they certainly aren’t talking to their children about it.
