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What is the Difference Between Cash Advance and Payday Loans

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The difference between cash advance and payday loans depends on what exactly is meant by cash advance loans. There are two major types of cash advance loans: those provided by credit card companies and those provided by payday lenders. The difference between cash advance and payday loans is more dramatic if you are discussing cash advances provided by credit card companies. If you are discussing cash advances provided by payday lenders, there is essentially no difference between cash advance and payday loans.

Understanding Cash Advance and Payday Loans

Many major credit card companies offer cash advance loans to customers. These customers must first be approved for a standard credit card. Secured cards do not typically offer a cash advance option. TO be approved for the credit card, you must go through a standard application process wherein your credit is checked and your income potentially verified.

After you have an approved credit card and line of credit, or credit limit, your lender will usually set a cash advance limit. In some cases, the cash advance limit is equal to the full credit line you have. In other cases, your cash advance amount is more limited. The interest rate on a credit card cash advance is always higher than your standard interest rate; usually at around 20 percent annually or above.

If you decide you need a cash advance, you usually will have to request one from your credit card company, either online or via phone. The cash advance may be sent to you in the form of a cash advance check. This means there is generally a waiting period. Some credit card companies will give you a pin number and let you take the cash from an ATM, but this isn't always possible.

As such,t he major differences between credit card cash advance and payday loans are that you must go through a more stringent approval process for a credit card cash advance, and you must wait for your money for a longer period of time in many cases.

A cash advance offered by a payday lender, on the other hand, is essentially a payday loan. In such cases, your credit isn't usually checked. You provide proof you have a job and proof of income, and then write a check or provide your bank information so the amount borrowed plus the fees can be debited from your account. In most cases, you receive the money instantly.

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