Depending on your loan type and state, a Cash Advance charges a flat fee and does not have interest accruing fees. The typical fee for a Cash Advance is $15 per $100 borrowed — a set price for a short-term transaction. This makes a Cash Advance often less expensive than bouncing a check, missing a credit card payment or neglecting a bill.
The Federal Truth in Lending Act (TILA) requires all financial institutions to disclose loan fees as Annual Percentage Rates (APR). To comply with TILA, Advance America reports the implied APR of a cash advance — the amount you would pay if you renewed your advance every two weeks for a full year. However, the average loan term is only two to four weeks. APR is a more appropriate measure of costs associated with loans that last for at least a year, such as a mortgage loan or a car loan. However, even using APR as a measure of the cost of various options for short-term loans, Payday Loans and Cash Advances are still the least costly option compared to bank overdraft, bounced check, late payment and utility reconnection fees.
Payday advance fee vs alternatives
Sources: CFSAA.com; Stephens, Inc. 2011; Moebs Services 2010 Fee Revenue Study; Bankrate.com; Readex Research National Data on Short-Term Credit Alternatives 2006; Moebs Services 2010 Financial Pricing Survey