Understanding Cash Advance Debit Cards
It can happen to anyone. Your car breaks down on the way to work. Your child breaks his arm while playing.
Unforeseen events can easily lead to unforeseen expenses, and for many, these unexpected bills can wreak havoc on their finances.
In the past, one might have turned to their bank or their credit cards in order to obtain a short-term loan to cover these types of sudden expenditures. Today's credit crunch, however, has made securing a short-term loan very difficult for many Americans.
The federal government has attempted to intervene, but to no avail for those whose credit scores might not be as high as others.
So, where can consumers who are unable to obtain quick cash from their bank or credit card turn?
One possible solution to these individual's short-term financial needs is a payday loan cash advance debit card.
The Payday Loan Industry
Payday loans are short-term loans with repayment windows typically spanning 14 to 31 days. Borrowers who secure payday loans are expected to repay the loan by their next payday.
One of the benefits of payday loans is their convenience. To acquire a payday loan, all the borrower needs to do is write a personal check for the borrowed amount plus finance charges. In most cases, the borrower is able to obtain the loan without the need for a credit check.
The lender then holds the check until the loan payment is due. When the payment is due, the borrower will need to repay the loan plus finance charges in one lump sum. There are two ways in which the borrower can repay the loan. He or she can pay the lender directly or the lender can deposit the original check. If the borrower is unable to pay the loan by the repayment due date, he or she can extend the loan for another pay period by paying an additional finance charge.
Payday loans also are available online, adding to the convenience factor. In this case, the borrower simply provides his or her bank account information, with the loan deposited directly into the borrower's account.
The Convenience of Prepaid Debit Cards
As the payday loan industry has advanced, so has its conveniences.
Today, many payday loan customers can acquire their loans via a cash advance debit card, also referred to as a prepaid debit card. Prepaid debt cards allow the lender to deposit the loan directly to the card rather than providing the borrower with actual cash.
Prepaid debit cards offer consumers several advantages over standard payday loans:
- Prepaid debit cards allow borrowers to pay their bills online versus having to mail in their payments.
- The FDIC insures funds deposited on prepaid debit cards for up to $250,000.
- Well-known credit card companies, such as Visa, back many prepaid debit cards.
- Borrowers can use many prepaid debit cards to access cash from ATMs as well as make purchases from millions of merchants worldwide.
While payday loan cash advance debit cards do offer several advantages, borrowers should be aware of the unique fees associated with these cards.
Cash advance debit card fees can include:
- Fees to purchase the debit card;
- Monthly fees for account maintenance;
- Fees to purchase a PIN;
- Fees for ATM transactions;
- Fees to re-load the debit card; and
- Fees to close the account.