By: Yara Zakharia, Esq.

Avoiding The Cash Advance Loan Cycle

When unforeseen financial jams arise, savvy consumers with little or no credit and with limited financing options often turn to cash advance loans for relief.  However, these credit solutions are intended to keep borrowers afloat during an emergency and for a short duration, not to serve as long-term remedies to monetary issues.  Each year, millions of fast cash customers find themselves trapped in the cycle of consumer debt, which can lead to serious consequences if left unaddressed.  To avoid such a predicament, borrowers should utilize the cash loan in a judicious manner.  What follows are some useful tips on managing a check cash advance wisely:   

1.    Maintaining adequate funds in bank account

A no credit cash advance borrower should ensure that, on the due date, there is a sufficient amount of cash in his or her account to permit withdrawal by the creditor or to cover his or her postdated check.

2.    Preparing and sticking to a realistic budget

It is imperative that the cash advance consumer plan ahead by establishing a workable and strict budget.  This will enable him or her to have the funds needed to pay off the loan and avoid further immersion into debt.  The first step involves recording all monthly expenditures, with one column listing the large expenses and the other, the smaller expenses.  The second step necessitates that the cash advance payday loan customer eliminate any purchases that are not indispensable, keeping in mind that small items do add up.  Next, borrowers should each month set aside savings, however small, in order to meet any unexpected expenses or emergencies.

3.    Paying the cash advance payday loan on time

When a borrower is delinquent on a payday cash advance loan, interest fees balloon and accumulate.  It is therefore extremely important for check cash advance payments to be made in full and on time.

4.    Borrowing only what you can repay

No credit cash advance customers should only borrow money that they know they will be able to pay back with the next paycheck.  They should have a sufficient cash reserve to last until the following payday.  Cash advance borrowers should therefore plan to pay back the loan's full amount by the next payday and be financially stable.

5.    Borrowing cash advance loans only in emergencies

6.    Using the cash responsibly

To avoid debt, check cash advance consumers should exercise sound judgment when utilizing the issued funds.  If, for instance, they do not need to spend the $500 in bad credit loan funds in its entirety, they should save the unused portion for repayment purposes.

7.    Shopping around for lowest fees

Consumers are encouraged to comparison shop for a reputable cash advance company extending the lowest fees and charges.  Some credit unions, for instance, offer cash advance loans with low fees. 

8.    Consulting a credit counseling agency

Credit counselors can assist bad credit cash advance borrowers encountering temporary cash problems in a number of ways:

•     developing a budget
•     negotiating with lenders
•     paying off debt
•     creating a debt-management plan to avoid cash problems in the future

Cash loan customers may find a credit counseling agency by visiting www.aiccca.org.

9.    Borrowing from friends or relatives

10.    Avoiding loans from more than one creditor at a time

11.    Obtaining overdraft protection

To protect them from incurring bounced check fees, fast cash consumers should request overdraft protection on their checking account.