If you need cash fast, you might think a cash advance is a good idea. For borrowers with low credit scores, you might also be worried you’ll be turned down for these types of advances.
Learn more about how cash advances work and how to get a cash advance with bad credit.
We’ll also go over how these loans affect your credit score and why you might want to choose an alternative instead.
What is a Cash Advance?
A cash advance is a small, short-term loan often used for emergency expenses. They usually have high interest rates and often include fees.
The most common cash advances are from credit card companies, but payday loans are also a type of cash advance.
Payday Loans
A payday loan is a type of loan with a short repayment period.
You usually have to pay back the loan by your next paycheck or pay a "rollover fee" to carry the balance to the next pay period.
Many times, payday loans have steep interest rates and fees, along with less than clear repayment terms, making it easy to pay more than you originally intended.
Credit Card Advances
Credit card cash advances are available for most credit cardholders. This lets you borrow cash from your line of credit.
It’s like buying cash instead of buying a product. The cash you borrow is added to your credit card balance—along with any cash advance fees and interest.
Interest works a little differently on a cash advance compared to normal credit card purchases.
It starts accruing right away. Even if you pay your credit card balance in full, you’ll still have to pay the interest for your cash advance.
Finance Apps
Some banking and personal finance apps let customers get cash advances.
Depending on your eligibility, you could get a few hundred dollars with no interest and no fees.
You’ll need to have an existing account on the app, most of which offer cash accounts that work like a bank account.
You may also need to pay a membership fee to access the ability to take out a fee-free cash advance with some apps.
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How Much Can I Get With a Cash Advance?
Each credit card issuer or payday loan lender will have different limits on your cash advance loan amount.
Payday loans and cash advances direct from payday lenders tend to be small loans. The same goes for most of the cash advances you can get from apps. You’ll only be able to get a few hundred dollars.
Payday loans also have restrictions due to state regulations — some states let you borrow more than others.
Your advance limit on a credit card is determined by your credit card company and is a percentage of your credit limit.
They usually don’t require a credit check, because you already have the line of credit.
For example, your credit limit is $1,000 and you can borrow up to 50% in a cash advance.
Your current balance is $0, so you can borrow a $500 cash advance with no credit check.
Note that you can only borrow up to your credit limit, however.
That means if you have a balance of $800, you can only borrow $200.
Are There Cash Advances for Bad Credit?
One of the most appealing aspects of advances is that most cash advances have no credit check.
Credit card advances rely on your existing line of credit for approval. As long as you have available credit, you can usually get an advance.
Payday loans and app cash advances work a little differently than credit card advances.
However, those options usually offer cash advances with no credit check. That’s because these types of emergency loans are meant to help people cover sudden expenses, even if their credit scores are low.
Do Cash Advances Hurt Your Credit?
A cash advance won’t hurt your credit score on its own. However, that doesn’t mean it can’t be harmful to your score.
A credit card advance adds to your credit card balance and increases how much credit you’re using.
This is called your credit utilization rate and makes up about 30% of your FICO score. A higher utilization rate can negatively impact your credit score.
Advances can also hurt your score if you overspend and can’t make your payment.
Payment history is the biggest factor in your credit score. Missing or late payments on your credit card can quickly hurt your score.
How Do I Get a Cash Advance?
Getting a cash advance from a payday lender usually requires you to visit a cash advance store.
Some lenders let you fill out a loan application online, as well. But you may have to wait till the next business day for your money to get to your checking account.
You can also take out a credit card advance at an ATM or in financial institutions like a bank or credit union.
Getting an advance at an ATM usually requires a PIN for your card. If you visit a bank, you’ll usually need a government-issued photo ID to get the money.
On the other hand, borrowing from an app can be done from anywhere.
Cash Advance Alternatives
Getting a cash advance with bad credit might be easy, but is it a good idea?
Most of the time, no. Credit card cash advances add interest right away. That means there’s no grace period to pay off your balance before you’re charged interest.
These costs can add up and potentially hurt your credit score. Before choosing a cash advance, consider some of these alternatives.
Short-Term Installment Loans
Like cash advances, short-term installment loans are personal loans that give you access to cash for unexpected expenses, such as car repairs.
Unlike cash advances, installment loans have fixed interest costs and repayment terms. That means you’ll know exactly how much interest you’ll pay on the loan.
Lenders like Possible Finance have an easy online application process and quick loan approval.
You could get approved for an online loan up to $500*—even if you have poor credit. An installment loan can also help you build your credit history.
Keeping up with on-time payments will help you build your credit score and could even result in a good credit rating or even better.
Buy Now Pay Later
If you need a cash advance to buy something, a buy now pay later or BNPL loan could be the right fit.
BNPL allows you to buy something and then pay the amount back in installments.
As with cash advances, buy now pay later can come with fees and non-payment could result in your credit score taking a hit.
Title Loans
A title loan uses your car title as collateral for a small, short-term loan.
Car title loans often have similar terms to payday loans: short repayment periods and high interest rates.
You may be able to get a larger loan amount, depending on the value of your vehicle, however.
Title loans are usually considered a last resort for fast financing. This is mostly due to the fact that you could forfeit your vehicle if you miss payments.
The Bottom Line: Cash Advance for Bad Credit
Traditional cash advances aren’t your only option when facing a financial emergency.
Alternative online lenders—like Possible Finance—can help you get the money you need with better terms.
Be sure to consider all of your options the next time you need cash quickly.
