When you need money fast, cash advances can go a long way in saving the day for many people. In fact, interest in cash advances has been climbing. Our team did a Google Trends analysis and found that the search term “cash advance” received approximately 2.3 million searches in the past month and searches are roughly 51% higher than this time last year.
Americans are onto something: A cash advance can certainly buy you some short-term breathing room, but because of high interest, transaction fees and extra charges, it’s a financing option reserved for borrowing small amounts of money only when you need to fill a temporary gap.
Does this sound like your situation? Consider a cash advance app. Unlike typical cash advances through your credit card, a cash advance app typically doesn’t charge interest. Here are some to consider.
Cash advance apps to consider
If you do decide to get a cash advance, consider platforms that offer favorable terms on their cash advance products. For instance, Varo Advance offers advance amounts of $20 to $500, and the less you borrow, the lower your fee will be. There’s no interest, no monthly service fee or late fee, and Varo Advance also doesn’t charge an additional fee for same-day or instant delivery like some platforms do.
Varo Advance
Loan amounts
Terms
Fees
$1.60 – $40 based on loan amount
Pros
- Fees are based on how much you borrow so the less you borrow, the lower the fee
- No monthly service fee
- No late fee
- No fee for same-day or instant delivery
- No mandatory tip
- No credit check
Cons
- Must have an active Varo Bank account with a balance over $0 to qualify
- Borrowing limit is based on account activity so you can only unlock higher borrowing amounts over time
Keep in mind that in order to qualify for a cash advance from Varo, you must have a Varo bank account with a balance above $0. Also, the amount you’re able to borrow is based on your account activity, so you’ll be able to borrow higher amounts over time.
If you would prefer to borrow money from your paycheck, Payactiv lets you do this since it’s an employer-based Earned Wage Access (EWA) service. You can borrow up to 50% of your earnings, up to $1,500, but, ultimately, your employer sets the limit. Your company must also use Payactiv in order for you to be eligible for a cash advance.
Payactiv
Loan amounts
Terms
Repayment is automatically deducted from your next paycheck
Fees
No fee for ACH bank transfer; $2.49 without direct deposit of at least $200
Pros
- Lets you borrow money from your paycheck early
- Repayment is automatically deducted from your next paycheck
- Potentially no fees
- Option to transfer wages to your Payactiv Visa® Card but this may come with a fee
- Lets you borrow larger amounts of up to $1,500
Cons
- Real-time transfers come with a fee
- ACH bank transfers take up to 3 days to be completed
As we mentioned earlier, fees for cash advances can be quite high at times, but we ranked MoneyLion Instacash as one of the best platforms for lower fees. MoneyLion actually doesn’t charge a fee if you choose to wait 1 to 5 business days for your funds. And if you choose an instant transfer, the fee will only be $0.49 to $8.99, depending on the transfer method. That’s lower than Varo’s fees, for instance, which can be upward of $40, depending on how much you borrow.
MoneyLion InstaCash
Loan amounts
Up to $1,000 for RoarMoney℠ customers; up to $500 for all others
Terms
Repayment is automatically deducted from linked bank accounts
Fees
No fee for 1–5 business days; $0.49–$8.99 for instant transfers, depending on disbursement method
Pros
- Fee-free deposit option if you choose to wait 1–5 days for funding
- Relatively low instant transfer fees (on the lower end) compared to other services
- $0 monthly administrative fee
- Tips are optional
- No credit check
Cons
- $1,000 borrowing maximum is only available to RoarMoney℠ customers
How cash advances work
A cash advance, by definition, is a short-term loan that lets you borrow against your credit card’s limit. Some platforms, like the above, actually let you take a cash advance against the value of your next paycheck, so you receive some of the money you worked for a few days earlier. Cash advances are designed to get you quick access to small amounts of money — usually a few hundred dollars to $1,500.
It’s important to note that the fees on a cash advance can be really high. Plus, if not using a cash advance app, the interest on the loan often starts accruing the same day you receive the advance — and the rate is often higher than a standard credit card APR. For these reasons, sometimes the risks of a cash advance can outweigh the rewards. We did a full breakdown of how cash advances work and found that a $500 cash advance could potentially cost you up to $99.50 in interest and fees if you only paid $50 per month.
This is who a cash advance is for
When you consider the fees, higher interest rates and small funding limits, a cash advance may not be best suited for everyone, even if it’s through a cash advance app. And in many cases, you should probably consider other avenues, like a personal loan or borrowing from a family member, before turning to a cash advance.
That being said, a cash advance may be a decent short-term solution for you if:
- You need to borrow money but have a low credit score. Cash advances typically don’t require a hard credit check. Personal loans and new credit card applications do, however. It may be easier to get approved for a cash advance compared to one of these other options.
- Your income is predictable and you know you will be able to pay it back quickly. Avoid taking on a cash advance if you don’t have a plan for repaying it. Fees and interest can add up fast, making it even harder for you to pay back even a small sum of money.
- It’s a one-time thing. Sometimes, life happens and we need a way to bridge a small financial gap while we wait for our next paycheck. Just be cautious, create a repayment plan and avoid making a habit out of taking out cash advances. If you aren’t careful, you can unintentionally dig yourself into a deeper financial hole.
Again, you should only consider a cash advance if you have no other options and just need to cover the gap for a small amount of money.
FAQs
Is a cash advance the same as a payday loan?
Cash advances are not the same as payday loans. Payday loans are short-term loans with high interest rates and fees and are often considered predatory lending. They can result in a six-figure APR if borrowers don’t repay in full quickly (typically within two to four weeks).
Cash advances provide access to cash from a line of credit you already have or early access to a portion of wages you’ve already earned. Users may have to pay a transaction fee, and there may be additional charges for instant transfers and subscriptions. With a standard cash advance against your credit, there’s typically interest.
Do cash advances affect your credit score?
Most cash advance apps don’t report to credit bureaus and some may only conduct a soft credit check when you apply, which doesn’t hurt your credit score. However, if you fail to repay the advance, the platform may send your debt to a collection agency, and that collection account could negatively impact your credit score.
Subscribe to the CNBC Select Newsletter!
Money matters — so make the most of it. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox. Sign up here.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed financial decisions. Every cash advance article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of loan products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
Catch up on CNBC Select’s in-depth coverage of credit cards, banking and money, and follow us on TikTok, Facebook, Instagram and Twitter to stay up to date.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.