financial emergency

Times When You Shouldn’t Take a Cash Advance

There are certain circumstances that call for the use of a cash advance or payday loan, and those are emergencies. Using a service like is a really good idea as long as you can pay the money back on time.

Still, just because you may be able to take a cash advance or a payday loan does not mean that you should.  The truth is, this type of loan should be used sparingly and with caution.

Poor Reasons to Take a Cash Advance

1. To go shopping. While some people may consider a new electronic gadget or an adorable outfit an emergency, shopping is not a good reason to take out a cash advance. You are much better off waiting until your paycheck comes, get a credit card, or save up the money. It may even be a better idea not to spend the money on the item you are looking at anyway.

2. To pay off other debt. You shouldn’t take out a cash advance to pay off another cash advance. If you have taken out a payday loan before and you are unable to pay it back, simply negotiate with the payday lender. Pay all that you can as soon as you can, as interest and late fees will pile up quickly. If you have other debt that is to be paid over time, you will probably save more money by paying under the original terms than you would taking out a payday loan.

3. To have extra cash. If you have sufficient funds in your bank account to cover your financial obligations, a cash advance is not needed. This is especially true if you also have some savings set aside. It is a waste of money to pad your bank account with extra funds, only to pay finance charges on a payday loan that you didn’t really need. While having a little extra money within a single day may sound tempting, just wait for your next paycheck.

4. To build credit. While timely payment can have a positive affect of your credit score, payday loans will not affect your credit history much. Since these cash advances are short term, only one or two payments will be on record. If you continuously take out payday loans, this could actually hurt your credit score. Taking out a cash advance when you truly need it will not damage your score, but repeated use of this system will not look good. You can build your credit score much better with a bank issued personal loan.

5. To take a trip. A weekend getaway may sound really nice, and if you don’t have savings or credit cards available, a cash advance might seem like an escape route. Taking out a payday loan for a mini-vacation could lead to problems. If you spend all of the money, you may not be able to pay it back. Fees will pile up and your credit score will be negatively impacted. The best idea is to save up the money for your excursion or get a credit card.

What a Cash Advance is Really For

As mentioned earlier, a cash advance or payday loan is meant to be used in emergencies and only if you don’t have other options.

Car accidents, unexpected expenses (such as repairs on your home, medical bills, etc.), unpaid rent and other financial hardships that need to be taken care of in a timely manner are legitimate reasons for getting a payday loan.

If you don’t have a friend or family member to borrow from, you have no savings and no credit cards available, a cash advance can get you out of a tight spot. If you bills are overdue or in danger of becoming delinquent, a payday loan can help.

Remember that cash advances come at a price and you should only use them in the case of an emergency.

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