Cash Advance Service - The Real Story
A cash advance service operates much like a credit card service in that if the borrower cannot afford the loan amount and interest at the time of maturity, they have the option of paying a fee to extend the loan (or ‘refinance’ it). The fee grows exponentially every time the loan is refinanced.
Payday lenders, as well as larger, more conventional banks, offer various cash advance services. However, much controversy surrounds these services, which critics say exploit the poor, needy, and young, enticing them with loans that merely imprison them in debt via high interest rates and refinancing fees. Although a cash advance may benefit someone who is temporarily unable to pay their bills or buy groceries and would not be able to obtain the necessary funds otherwise, such loans may not be in everyone’s best interest. The controversy over cash advance services is so great that payday lending is illegal in twenty-five states in the United States. Thus, many payday lenders must coordinate with banks outside their state to provide cash advances to customers.]]>
