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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 in order to obtain funds to cover these types of sudden expenditures. Today's credit crunch, however, has made securing an advance 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 turn?

One possible solution to these individual's short-term financial needs is a cash advance debit card.

Understanding the Industry

Payday loans are short-term financial solutions with repayment windows typically spanning 14 to 31 days. Borrowers who secure funds are expected to repay the balance by their next payday.

One of the benefits of these services is their convenience. To acquire funds, all the customer needs to do is write a personal check for the borrowed amount plus finance charges. In most cases, the consumer is able to obtain the money without the need for a credit check.

The lender then holds the check until the payment is due. When the payment is due, the individual will need to repay the amount borrowed plus finance charges in one lump sum. There are two ways in which the customer can repay the lender. He or she can pay the lender directly or the lender can deposit the original check. If the borrower is unable to pay the balance by the repayment due date, he or she can extend it for another pay period by paying an additional finance charge.

These services are also are available online, adding to the convenience factor. In this case, the consumer simply provides his or her bank account information, with the funds deposited directly into the borrower's account.

The Conveniences to Think About

As the industry has advanced, so has its conveniences.

Today, many customers can acquire their funds via a debit card. They allow the lender to deposit the money directly to the card rather than providing the consumer with actual cash.

They offer consumers several advantages over standard lending options:

  • They allow individuals to pay their bills online versus having to mail in their payments.
  • The FDIC insures funds deposited for up to $250,000.
  • Well-known credit companies, such as Visa, back many prepaid debit cards.
  • Consumers can use them to access cash from ATMs as well as make purchases from millions of merchants worldwide.

While this option does offer several advantages, individuals should be aware of the unique fees associated with this service.

Some of the fees can include:

  • Fees to purchase the service;
  • Monthly fees for account maintenance;
  • Fees to purchase a PIN;
  • Fees for ATM transactions;
  • Fees to re-load with more money; and
  • Fees to close the account.