The neobank Dave seems to be making progress on its journey to profitability, in part through its ExtraCash short-term loan product. It increased its cash advance limit to $500, grew its membership by 36% in the past 12 months, and continued its march toward a target profit margin of 44%. The company is also working on a major upgrade to the AI ​​algorithms it uses to underwrite the short-term loans it provides through its feature called ExtraCash.

While Dave’s unit’s economy continues to improve, it was still operating at a loss last quarter, according to financial statements released Thursday by the company. Its net income beat analysts’ expectations, but it also had higher-than-expected operating expenses. The company reaffirmed its goal of achieving $200 million to $215 million in operating revenue for the year and a variable profit margin of 40% to 44%.

Jeffries analysts rated Dave as “on hold” Thursday after the earnings call. On Friday, the stock was up 20% from the previous day’s close, at $0.36 per share. John Hecht, equity analyst for Jeffries who covers Dave, said the company plans to issue a reverse stock split between 1 for 5 and 1 for 50, and the company plans to issue more shares.

While Dave markets ExtraCash as a way to help customers between paychecks, it’s also a customer acquisition bet and a source of revenue. Dave allows customers to choose between receiving ExtraCash advances at no cost by taking them through ACH, or with a fee by taking them through an instant deposit to an external or Dave account. Dave then deducts the loan amount from the user’s next paycheck.

Another source of revenue is the debit card interchange fees he earns when users use their Dave debit card. The company also makes money through a $5 monthly service called Dave Credit Builder. Consumers pay the fee for Dave to share their ExtraCash repayment history with Equifax, which should improve their credit score.

CEO Jason Wilk said Thursday that the debit card is what keeps Dave loyal. So while the card was originally an optional product feature when users signed up in 2020, every new account now comes with a debit card.

“Our updated strategy to launch this product has been to offer Dave cardholders instant and cheaper access to extra cash, which has already proven to be an effective way to boost first-time use of the card, a leading indicator of a longer-term direct access deposit relationship,” Wilk said during the company’s earnings call on Thursday.

Through September, Dave’s 7.8 million members have collectively spent $197 million with their Dave debit cards and taken out $757 million in ExtraCash loans. The company also recently take a step exceeding $5 billion in total in such advances since its founding.

Much of Dave’s success, Wilk said, has to do with the underwriting model he uses, which is fed with transaction data from customers’ external bank accounts to determine their ability to repay an advance within days.

The company is working on a “next-generation ExtraCash underwriting model,” according to CFO Kyle Beilman. Beilman didn’t provide details on what would change with the new model, but said the company is currently testing it.

Dave has also spent the last three months beefing up his fraud checks on ExtraCash, according to Beilman. So far, the results of reduced fraud and underwriting improvements have been lower delinquency rates in each quarter of this year compared to the same quarter last year.

In March, the news has fallen that Dave had partnered with cryptocurrency exchange FTX and taken a $100 million investment from the company caused the company’s share price to drop 14%. To date, Dave has not announced any additional features resulting from the agreement.

Friday, FTX announcement it had filed for Chapter 11 bankruptcy in the United States, and its CEO Sam Bankman-Fried resigned.

“Dave has not announced an official crypto launch and we will continue to monitor the industry’s reaction to the current crypto environment,” Wilk said on Friday, after the filing was announced.

Regarding the longer-term headwinds his business and the economy as a whole may face, Wilk said Dave can sustain the successes he’s had with his cash advances even in a recession or decline in employment, as more people may seek advances to keep them afloat between paychecks.

“We are very confident that this product performs very well and has a strong need in just about every environment except a high stimulus environment,” Wilk said. “This is where we have seen demand fall in 2020 and 2021 as the government has stepped in to cover many short-term cash needs for our members.”

Except when consumers receive a large amount of stimulus money, Wilk said, “customers will still need access to a small amount of cash between paychecks to cover things like gas, groceries and food”.

If you already have a credit card, getting a cash advance is very easy.

But it can also be super expensive. Before borrowing money from your credit card, make sure you understand how a cash advance works, how you can minimize cash advance fees, and whether there are better alternatives.

How do cash advances work?

A cash advance is a way to borrow money from your credit card company. You can initiate your cash advance online, through cash advance checks sent with your credit card statement, or through an ATM.

To withdraw money from an ATM using a cash advance, you will need the PIN associated with your credit card. You will then need to agree to all cash advance fees before you can get your money. You may also incur ATM fees.

If you’re starting the cash advance online, you can set it up to be deposited directly into your checking account via an ACH transfer. You’ll also need to agree to any cash advance fees before you get your money this way.

Another way to get a cash advance is to use convenience checks that your credit card issuer sends with your statements. These may be provided with every statement, every few months, or once a year upon renewal, depending on your credit card issuer. As soon as you sign and submit the check, you agree to the terms of the cash advance.

Your cash advance limit may be lower than your credit card purchase limit. Check your documentation or contact your card issuer to find out your credit limit for a cash advance.

What makes credit card cash advances so expensive?

Cash advances are an extremely expensive way to borrow, even more expensive than using your credit card to make a purchase. Cash advances come with additional transaction fees and higher APR than regular credit card purchases. And that APR starts accumulating immediately unlike credit card purchases.

Transaction fees

The first expense to consider is transaction fees. These fees are usually between 3% and 5%. Typically, there is a minimum charge of around $10.

Let’s say you took out a $250 credit card cash advance with a 3% transaction fee, but a minimum transaction fee of $10. Three percent of $250 is $7.50, but that’s less than the minimum charge. You would therefore be charged a $10 transaction fee, even if it is higher than 3%.

But if you take out a $1,500 cash advance, 3% would be $45. Since 3% is more than the minimum transaction fee of $10, you would pay $45 in transaction fees.

High APR

Credit cards almost always have a high APR. But each card actually comes with at least two APRS: one for purchases, then another for cash advances. The cash advance APR is almost always higher.

This is true even if you sign up for a card with a 0% introductory APR. This 0% rate generally applies for a fixed period, say 12 months, and generally only applies to credit card purchases or balance transfers. It generally does not apply to the APR for cash advances.

Interest begins to accrue immediately

Not only do credit card cash advances come with a higher APR, but that interest starts accumulating immediately. With credit card purchases, you’ll enjoy a grace period and you won’t pay interest if you pay your balance in full by the due date on your first statement after purchase.

This is not the case with cash advances. There is no grace period. You start owing interest the moment the money comes out of the ATM (or is transferred to your bank account). Because interest starts accumulating immediately, it becomes much more expensive to pay off much faster.

What is the average cost of a cash advance?

The cost of your credit card cash advance varies depending on the amount you borrow. To simplify this analysis, let’s say you borrow $1,000. The average cash advance fees and interest rates on a cash advance are:

• 3% to 5% transaction fees
• 24.99% APR

On a balance of $1,000, your transaction fees can range from $30 to $50. With an APR of 24.99%, if you pay off your balance on the 30th day, you will owe approximately $20.83 in interest. If it only took a month to repay the money, the total financing costs would be between $50.83 and $70.83.

The longer it takes you to pay off the debt, the more it costs. Credit card interest is usually compounded daily. This means that what seems like a manageable amount of interest at first can quickly spiral out of control.

How to reduce the cost of a cash advance

A credit card cash advance is an expensive way to borrow, and one that you should avoid if possible. But if you find yourself in a situation where you absolutely need it, there are several ways to slow the bleeding. These are simple concepts, but they may not be easy to implement.

Minimize the amount you borrow

The fees and interest on your cash advance are a percentage of the amount you borrow. This means that one of the best ways to limit your interest and fees is to reduce the amount you borrow.

If you borrow this money to pay a down payment on a car loan so you have transportation to your place of work, maybe you don’t get the fanciest vehicle model. Instead, get something functional, safe and affordable without all the bells and whistles.

You can also try to negotiate with the dealer on the base price, which should reduce the amount required for a down payment by the bank.

Anything you can do to reduce the amount you borrow through a credit card cash advance is worth considering.

Repay your cash advance as soon as possible

Just trying to scrape together enough money to buy groceries until payday? Then be sure to repay your cash advance as soon as your paycheck hits your account.

Since interest is compounded daily, each day you owe money will significantly increase your amount owed, the longer it will take you to pay it off.

Cash Advance Alternatives

If you need cash fast, there are other products you might want to consider. Some are better than credit card cash advances – and some are worse.

Personal loan vs cash advance

Personal loans tend to be cheaper than cash advances if you have good credit. Unsecured personal loans don’t require any collateral, and you ideally want one with a fixed interest rate for predictable monthly payments.

If you have good to excellent credityou might expect these loans to come with a APR somewhere between 7% and 20%. If you have poor credit, however, interest rates could be even higher than cash advances.

Personal loans sometimes come with an origination fee, which is an additional fee, but is also already factored into the cost of the APR. If you take out one of these loans, the ideal is to find one without any prepayment penalty. That way, if you pay off the loan early to save money on interest, you won’t have to incur any additional expenses.

Also beware of personal loans with lump sum payments. With these loans, your monthly payment will be lower at the start, but you will only have one lump sum payment at the end. If you can’t afford the lump sum payment, you’re back to where you started – you need to borrow more money.

One downside to these loans is that they tend to have terms of at least one year, although you can find some with shorter terms. Another problem is that if you only need to borrow a few hundred dollars, most financial institutions offer a minimum amount between $500 and $1,000. So you might end up borrowing more than you need.

In many cases, a personal loan is preferable to a cash advance. But keep in mind that if you have bad credit or the interest rate offered to you is over 20%, this might not be the case. Run your own personal numbers with care.

Payday loan vs cash advance

The interest rate announced by payday loan lenders are rarely in terms of APR. If it did, it would often be over 100%.

Different states have different laws governing exactly how much payday lenders are allowed to charge, but even still, a cash advance will be considerably cheaper than a payday loan.

Borrowing money from family and friends versus a cash advance

If you are in a difficult financial situation, you can always ask a family member or friend for help. Depending on your relationship and the amount of money, they may keep the debt informal or draw up a formal contract with or without interest.

Before borrowing money from family or friends, make sure you can afford to pay them back in the near future. If you can’t, it can hurt your relationship. However, if you can find a favorable and realistic arrangement, this method is likely to be less expensive than taking out a cash advance.

Ask for help or cash advance

Take a cash advance to cover something like a utility bill? There may be a program to help you so you don’t have to borrow from your credit card company.

For utility bills in particular, there are usually two options: payment plans or charitable aid programs.

If your utility company offers you a payment plan, they may be willing to spread your current balance over several months, making repayment more feasible than paying off all of the duty in one lump sum. They can also set you up with a plan that estimates equal payments over the course of a year, so you don’t pay $20 for heat in July and $300 in January. Instead, you might get a more stable monthly bill of $150 or something.

If there is a state, government, or charitable program associated with your utility, it may have funds available to help people going through economic hardship. It may hurt your ego to apply for a program like this, but the amount of interest and main, it saves you money and helps you keep the lights on without going into unaffordable debt.

Brynne Conroy, a Pittsburgh-based writer, is the founder of the blog Femme Frugality and the author of “The Feminist Financial Handbook.” She is a regular contributor to The Penny Hoarder.

Amazon offers its merchants a new funding option that allows marketplace sellers to access funds in the form of a cash advance on future sales.

The new solution gives eligible Amazon sellers – the majority of which are small and medium-sized businesses – access to capital, from $500 to $10 millionto grow their business, protect their margins, develop new products, increase their inventory or manage their cash flow.

Powered by Paraffin, Amazon Merchant Cash Advance offers a flexible payment schedule that is determined by a fixed percentage of the merchant’s Gross Merchandise Sales (GMS) until the funding is repaid. Unlike a traditional loan, the funds come with no minimum payment requirements, no interest (instead, borrowers pay a fixed capital charge), no collateral requirements, no verification credit and no late fees. Perhaps most importantly, payments are only required during periods when a seller has made sales.

The new financing option joins that of Amazon other financing solutions for sellers, which includes term loans, interest-only loans, and lines of credit provided by both Amazon and third-party financing partners. Merchant Cash Advance is now available to select US-based businesses that have been selling on Amazon for at least Three months, and will extend to hundreds of thousands eligible sellers by early 2023.

“Amazon is committed to providing convenient and flexible access to capital for our sellers, regardless of size,” said Tai Koottap, director and general manager of Amazon Worldwide B2B Payments and Lending in a statement. “Today’s launch is another step in strengthening Amazon’s commitment to sellers and builds on the strong portfolio of financial solutions we already provide. This latest offering dramatically expands sellers’ reach and capabilities and expands their access to capital in a flexible way, helping them control their cash flow and, by extension, their entire business.

Cash Rewards Visa®* Upgrade is a combination credit card and Personal loan. You make purchases with the card as you would with any Visa credit card, but at the end of the month your balance is converted into a personal loan with a set interest rate and monthly payment. Upgrade typically offers 24, 36, or 60 month installment plans, and your options may vary depending on your credit situation.

For those planning to make a large, time-limited purchase (i.e. you can’t save money up front), the upgrade card offers a structured repayment plan with a defined APR. This can help avoid interest rates that increase over time. It can also help smooth out inconsistencies for those struggling to meet their own monthly payment schedules.

It’s marketed as a rewards credit card that earns “1.5% cash back,” but as we’ll explain, that’s not quite accurate in most cases. The most accurate description is that it is a personal loan that works much like a credit card.

How it works

The upgrade card works like any typical Visa credit card when making purchases. But at the end of the month, Upgrade will combine all fees into one plan with a fixed monthly payment amount and a fixed interest rate. This payment plan – and your credit score – will help you determine the overall amount of interest you’ll pay.

Each time you make a monthly payment on your upgrade balance, 1.5% of that payment will be applied as a “bonus” to the next month’s balance. Thus, if you pay $100, a bonus of $1.50 will be deducted from your capital the following month.

That’s why we don’t really consider it a “credit card rewards— most of the time, you’ll just get a small discount on the interest the upgrade charges you. With a typical rewards credit card, the goal is to pay off your balance in full each month so your rewards don’t You can also refund your entire balance with the Upgrade card, but it’s unclear how rewards would be credited in this case, and Upgrade did not immediately respond to our requests.

You can also use the Upgrade card for a cash advance, transferring the funds directly to the bank account of your choice. The same process follows with a cash advance as with purchases, and you don’t have to worry about cash advance fees like you would with a credit card.

Why it’s not a personal loan

Although the Upgrade Cash Rewards card is similar to a personal loan, there are a few key differences.

The first difference is that instead of withdrawing a fixed amount of money, like $5,000, the loan amount is determined by your credit limit and spending. Credit limits generally vary between $500 and $25,000 depending on a number of financial factors, such as your income, credit history and credit score, existing debt, etc. You can use as little or as much of your credit limit as you want, but not without potential impact on your credit score.

The second main difference with a traditional personal loan is that it slightly simplifies the overall process. Rather, it is a line of credit against an asset, such as a HELOC, so you don’t have to constantly reapply when you need a loan. You also don’t have to borrow money you may not need.

Finally, Upgrade doesn’t charge any prepayment fees, so you can always pay off your entire balance if you want or can. However, most of our best choices for personal loans don’t charge prepayment penalties either.

Other options to consider

If you find the combination of a credit card and a personal loan problematic, you can opt for a clearly defined financial product. Here are some recommendations on credit cards and personal loans.

Wells Fargo Reflect® Card

If you are planning to make a major purchase or purchases that you will not be able to pay for immediately, a Credit card 0% intro APR might be a good option. These cards can help avoid interest charges by giving cardholders a limited time frame of 0% introductory APR, sometimes up to 21 months or more. The Wells Fargo Reflect offers 18 months from account opening of an initial 0% APR on qualifying purchases and balance transfers (then 15.99% to 27.99% variable APR), and if you make your minimum payment on time every month during those 18 months, you’ll get an additional 3 months of 0% intro APR.

For more details see our Wells Fargo Reflect Card Review.

Wells Fargo Active Cash® Card

If you were intrigued by the upgrade’s 1.5% cash back offer, the Wells Fargo Active Cash® Card offers 2% cash rewards on your purchases – up front. There is also an APR introductory period so you can take advantage of inexpensive financing for a short time.

For more details see our Wells Fargo Active Cash review.

LightStream Personal Loans

Personal loans tend to offer lower interest rates than credit cards – even upgrade cards – and are specifically suited for large purchases like home renovations, debt consolidation, or other needs. LightStream in particular offers an APR range of 5.99% to 21.49% for its personal loans, but this can vary by loan type. It also features repayment terms of 2 to 12 years and financing ranging from $5,000 to $100,000.

FAQs

*All information about the Upgrade Cash Rewards visa has been independently collected by CNET and has not been reviewed by the issuer.

Editorial content on this page is based solely on objective, independent assessments by our editors and is not influenced by advertising or partnerships. It was not supplied or commissioned by a third party. However, we may receive compensation when you click on links to products or services offered by our partners.

Pune, Oct. 21, 2022 (GLOBE NEWSWIRE) — The latest Merchant Cash Advance Market The 2022 research report provides detailed information about the market overview, modern trends, demand and recent developments affecting the growth of the market over the coming year. The Merchant Cash Advance Market report also covers new business development, price, revenue, gross margin, market size, share, potential growth and upcoming market strategy followed by key players. This report also gives knowledge of the major company profiles in the market. The report focuses on the Merchant Cash Advance market size, segment size (mainly covering product type, application, and geography), competitor landscape, recent status and development trends. Additionally, the Merchant Cash Advance market forecast by regions, type and application, with sales and revenue, from 2022 to 2027. The report also covers the market landscape and its growth prospects in the coming years. Finally, the feasibility of new investment projects is assessed and general research conclusions are offered.

Get a sample PDF of the report – https://www.industryresearch.biz/enquiry/request-sample/21460087

Market analysis and overview: Global merchant cash advance market

With industry-standard analytical accuracy and high data integrity, the report brilliantly attempts to uncover major opportunities available in the global Merchant Cash Advance market to help players gain a strong position in the market. Buyers of the report can access verified and reliable market forecasts, including those regarding the overall size of the global merchant cash advance market in terms of revenue.

Merchant Cash Advance Market 2022 provides a comprehensive overview of crucial industry elements and elements such as drivers, restraints, past & present current trends, watch scenarios and technological growth. The report also focuses on global major major industry players of Global Merchant Cash Advance market providing information such as company profiles, product pictures and specification, price, cost, revenue and contact details. This report focuses on Merchant Cash Advance Market trends, volume and value at the global level, regional level and company level. From a global perspective, this report represents overall Merchant Cash Advance market size by analyzing historical data and future prospect.

Get Sample Copy of 2022 Merchant Cash Advance Market Research Report

List of Top Key Players listed in the Merchant Cash Advance Market Report are:

• Commercial financing Nucleus
• Increase capital
• merchant money
• Liberius
• 365 Business Financing
• Cabbage
• PayPal working capital
• Capify

Overall, the report proves to be an effective tool that players can utilize to gain a competitive edge over their competitors and ensure sustainable success in the global Merchant Cash Advance Market. All conclusions, data and information provided in the report are validated and revalidated using reliable sources. The analysts authoring the report have adopted a unique and industry-leading research and analytical approach for an in-depth study of the global merchant cash advance market.

Merchant Cash Advance Market Segment By Type:

• 0-250,000$
• $250,000 to $500,000
• > $500,000

Merchant Cash Advance Market Segment By Application:

• Time spent in business Time spent in business 6 to 12 months
• Time spent in business 12 to 18 months
• Time spent in business > 18 months

Learn more and share questions, if any, before purchase on this report at – https://www.industryresearch.biz/enquiry/pre-order-enquiry/21460087

Geographically, this report is segmented into several key regions, with sales, revenue, market share and growth rate of Merchant Cash Advance in these regions, from 2017 to 2027, covering

• North America
• Europe
• Asia Pacific
• South America
• Middle East and Africa

Client orientation :

1. Does this report consider the impact of COVID-19 and the Russian-Ukrainian war on the merchant cash advance market?
Yes. As COVID-19 and the Russian-Ukrainian war profoundly affect the relationship of the global supply chain and the price system of raw materials, we have certainly taken them into consideration throughout the research, and in chapters 1.7 , 2.7, 4.X.1, 7.5, 8.7, we explain in detail the impact of the pandemic and war on the merchant cash advance industry.

2. How do you determine the list of key players included in the report?
With the aim of revealing the competitive situation of the industry clearly, we concretely analyze not only the leading enterprises which have a voice globally, but also the regional small and medium enterprises which play key roles and have great potential. of growth.
Please find the list of key players in the summary.

3. What are your main data sources?
Both primary and secondary data sources are used when compiling the report.
Primary sources include in-depth interviews with key opinion leaders and industry experts (such as experienced front-line staff, directors, CEOs, and marketing executives), downstream distributors, as well as end users.

Secondary sources include researching major companies’ annual and financial reports, public files, news journals, etc. We also cooperate with certain third-party databases.
Please find a more complete list of data sources in chapters 11.2.1 and 11.2.2.

4. Can I change the scope of the report and customize it to suit my needs?
Yes. Multi-dimensional, deep and high-quality customized requirements can help our clients accurately seize market opportunities, effortlessly meet market challenges, properly formulate market strategies and act quickly, thereby enabling them to earn enough time and space for market competition.

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Detailed TOC of Global Merchant Cash Advance Market Report 2022

1 Merchant Cash Advance Market Overview

1.1 Product Overview and Market Scope of Merchant Cash Advance
1.2 Merchant Cash Advance Market Segment by Type
1.2.1 Global Auction Market Sales Volume and CAGR Comparison by Type (2017-2027)
1.3 Global Merchant Cash Advance Market Segment by Application
1.3.1 Merchant Cash Advance Market Consumption (Sales Volume) Comparison by Application (2017-2027)
1.4 Global Merchant Cash Advance Market, Region Wise (2017-2027)
1.4.1 Global Merchant Cash Advances Market Size (Revenue) and CAGR Comparison by Regions (2017-2027)
1.4.2 United States Cash Advance Market Status and Outlook (2017-2027)
1.4.3 Europe Cash Advance Market Status and Outlook (2017-2027)
1.4.4 China Merchant Cash Advance Market Status and Outlook (2017-2027)
1.4.5 Japan Merchant Cash Advance Market Status and Outlook (2017-2027)
1.4.6 India Merchant Cash Advance Market Status and Outlook (2017-2027)
1.4.7 Southeast Asia Cash Advance Market Status and Outlook (2017-2027)
1.4.8 Latin America Cash Advance Market Status and Outlook (2017-2027)
1.4.9 Middle East & Africa Merchant Cash Advance Market Status and Outlook (2017-2027)
1.5 Global Merchant Cash Advance Market Size (2017-2027)
1.5.1 Global Merchant Cash Advance Market Revenue Status and Outlook (2017-2027)
1.5.2 Global Merchant Cash Advances Market Sales Volume Status and Outlook (2017-2027)
1.6 Global Macroeconomic Analysis
1.7 The impact of the Russian-Ukrainian war on the merchant cash advance market

2 Industry Outlook

2.1 Merchant Cash Advance Industry Technology Status and Trends
2.2 Barriers to entry into the industry
2.2.1 Analysis of financial obstacles
2.2.2 Analysis of technical barriers
2.2.3 Talent Barrier Analysis
2.2.4 Brand Barrier Analysis
2.3 Merchant Cash Advance Market Driver Analysis
2.4 Merchant Cash Advance Market Challenges Analysis
2.5 Emerging market trends
2.6 Analysis of consumer preferences
2.7 Development Trends of Merchant Cash Advance Industry under COVID-19 Outbreak
2.7.1 Global COVID-19 Status Overview
2.7.2 Influence of COVID-19 Outbreak on the Development of Merchant Cash Advance Industry

Continued….

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About Us: –

The market is changing rapidly with the continuous expansion of the industry. Technological advancements have provided today’s businesses with multi-faceted benefits driving daily economic changes. Thus, it is very important for a business to understand the patterns of market movements in order to strategize better. An effective strategy gives companies a head start in planning and an advantage over their competitors. Industry research is a credible source for getting the market reports that will give you the head start your business needs.

Although the Capital One VentureOne Rewards Credit Card is marketed as a travel card, the Capital One Quicksilver Cash Rewards Credit Card is the most lucrative choice for your travel and day-to-day expenses because it generates a higher cashback rate .

The VentureOne offers an added travel benefit of car rental insurance*, but this does not exceed the value of the Quicksilver rewards. The Quicksilver still comes equipped with travel accident insurance*, and none of the cards have foreign transaction fees.

Introductory offer: $200 one-time cash bonus after spending $500 on purchases within 3 months of account opening

APR: 17.99% – 27.99% (Variable)

Intro Purchase APR: 0% intro on purchases for 15 months

Recommended credit: Excellent, good

Reward rate:

• Earn unlimited 5% cash back on hotels and rental cars booked through Capital One Travel, where you’ll get Capital One’s best prices on thousands of travel options. Conditions apply
• Earn unlimited 1.5% cash back on every purchase, every day

Annual fee: $0

Introductory offer: Earn 20,000 bonus miles once you spend $500 on purchases within 3 months of account opening, which equals $200 on travel

APR: 17.99% – 27.99% (Variable)

Intro Purchase APR: 0% intro on purchases for 15 months

Recommended credit: Excellent, good

Reward rate:

• Earn 5X miles on hotels and rental cars booked through Capital One Travel, where you’ll get Capital One’s best prices on thousands of travel options
• Earn unlimited 1.25X miles on every purchase, every day.

Annual Fee: $0

Awards

Winner: Capital One Quicksilver

The Quicksilver offers 1.5% cash back on every purchase, compared to VentureOne’s 1.25 miles per dollar. They also earn 5% cash back and 5x miles per dollar for rental cars and hotels booked through Capital One Travel, respectively.

No matter how you slice it, the Quicksilver will offer more rewards than the VentureOne for the same amount of spend.

welcome bonus

Winner: Tie

Here are the welcome bonuses for both cards:

• Capital OneVentureOne: Earn 20,000 bonus miles once you spend $500 on purchases within three months of account opening
• Capital One Quicksilver: Earn a $200 cash bonus after spending $500 on purchases within three months of account opening

As long as you choose to redeem your 20,000 miles with VentureOne for past travel expenses or to book travel through Capital One Travel, the bonus will be worth $200. Both welcome bonuses offer the same value for the same amount spent.

Costs

Winner: Tie

Neither card has annual fees or foreign transaction fees. They both have late payment fees, cash advance fees, and balance transfer fees, so neither card is gaining traction here.

Travel benefits

Winner: Venture One

The VentureOne Rewards card has a slight edge here thanks to the addition of its Car Rental Insurance benefit*. The Quicksilver offers cardholders extended warranty protection* and travel accident insurance*, but not car rental insurance.

It should be noted that the Quicksilver has limited trade-in options for travel compared to the VentureOne. If you plan to use mileage transfers, you can only do so with the VentureOne. However, Capital One doesn’t partner with many US airlines, so unless you primarily fly overseas, you’re still best off using the Quicksilver for its strong rewards.

Introductory APR Offer

Winner: Tie

Both credit cards offer cardholders the ability to avoid interest charges for new purchases and balance transfers through their introductory APR offers. With either card, people get an introductory APR of 0% for purchases and balance transfers for 15 months (then 17.99% to 27.99% variable).

During this time you can pay off existing credit card debt through a balance transferor make a large purchase and pay off the balance when it’s not earning interest.

Keep in mind that both cards carry a 3% balance transfer fee during those 15 months, with no charge after the 15 months are over. But don’t let that deter you from using a balance transfer during this time. A balance transfer fee may seem intimidating, but it will often end up saving you money when combined with an introductory APR given the high level of interest rates.

The bottom line

Ultimately, the Quicksilver is the most powerful card thanks to its higher redemption rate while still offering a few travel-related benefits. What the VentureOne has on the Quicksilver – rental car insurance* – isn’t enough to tip the scales in its favor given that the two cards are on equal footing in many other respects .

FAQs

*Terms, conditions and exclusions apply. Please see your Benefits Guide for more details.

Editorial content on this page is based solely on objective, independent assessments by our editors and is not influenced by advertising or partnerships. It was not supplied or commissioned by a third party. However, we may receive compensation when you click on links to products or services offered by our partners.

Morgan Stanley Blue Cash Preferred® American Express Card* vs. Citi® Double Cash Card

Where the Morgan Stanley Blue Cash Preferred Amex grabs headlines with cash back in specific categories, the strength of the Citi Double Cash card for cardholders is the ability to earn 2% cash back on all purchases – 1% when purchases are made and an additional 1% when they’re paid. We recommend pairing these two cards like these for maximum earning potential on all your spending.

Rewards on Citi Double Cash come in the form of Thank You Points, which can be converted into cash back, used to book travel, or transferred to one of Citi’s travel transfer partners.

Morgan Stanley Blue Cash Preferred® American Express Card* compared to the Blue Cash Everyday® card from American Express

Those who spend frequently in the bonus categories offered on Blue Cash Preferred, but don’t want to pay an annual fee, may want to consider Preferred’s no-annual-fee sister card, the Blue Cash Everyday® Card from American Express.

With this card, you’ll earn 3% cash back at US supermarkets, US gas stations and online retail purchases in the US (up to $6,000 in each category per year in purchases, then 1 %) and 1% cash back on other purchases. Cash back is received in the form of reward dollars that can be easily redeemed for statement credits. The biggest difference between the two is that Blue Cash Everyday has no annual fee, but you also earn less at US supermarkets and US gas and also redeem high transit rewards for bonus earnings at select department stores . Those who spend more than $61 a week on groceries and other supermarket items will come out on top with the Morgan Stanley Blue Cash Preferred despite its $0 for the first year, then $95 annual fee.

Morgan Stanley Blue Cash Preferred® American Express Card* vs Citi’s Costco Anywhere Visa® Card*

Costco shoppers interested in earning points on gas can take advantage of the Costco Anywhere Visa to earn 4% cash back on eligible gas and EV charging purchases for the first $7,000 per year, then 1 % thereafter, 3% cash back on eligible dining and travel purchases, 2% cash back on all other purchases at Costco and Costco.com, and 1% cash back on all other purchases .

For those whose annual gas bills will not exceed $9,333 (the threshold at which earning 3% on gas is more profitable than earning 4% with a cap of $7,000), the Costco Anywhere Visa will earn more on gas purchases. gas. Whether or not the remaining categories fit spending habits or budgets is up to each individual consumer.

The Costco Anywhere visa does not have a low introductory APR like the Morgan Stanley Blue Cash Preferred Amex, but other than the required Costco membership, it has no additional annual fees and unlike the Morgan Stanley Blue Cash Preferred Amex, it does not charge foreign transaction fees.

Earn rewards

This card offers cash back on a number of daily purchases, but its real appeal is its earning potential for groceries. You earn 5% cash back on rides, which is the highest overall offer of any comparable card in this category. Scotia Gold American Express offers 6% cash back on groceries, but only at select stores, such as Sobeys, IGA and FreshCo. This card therefore always offers the highest cash back rate on all grocery purchases. Given that food prices increased by 5% to 7% in 2022 Due to inflationary pressures, the BMO CashBack World Elite Mastercard is a very attractive credit card that can be incredibly useful to most Canadians.

However, it should be noted that 5% applies on the first $500 spent on grocery purchases per statement period, then groceries revert to 1% unlimited cash back thereafter. Since the annual food expenditure for a family of four is estimated at $1,230 per month, maximizing the 5% cash back on the first $500 is easy. At least you’ll earn 1% cash back on the remaining $730.

You’ll also earn 3% Cash Back on Gas on the first $300 spent on fuel or electric vehicle charging purchases per statement period and unlimited 1% Cash Back thereafter. You’ll earn a hefty 4% cash back on public transit, which includes carpools, taxis and public transit, again on the first $300 spent on ground transportation purchases per statement cycle period and unlimited 1% cash back thereafter. Plus, you’ll earn 2% on recurring bills, such as phone bills, gym memberships, and streaming services.

If you use it as your everyday credit card (and pay it off monthly), it’s easy to earn money on basics like monthly groceries, gas, and food. recurring purchases.

As for other benefits, the card offers 1% cash back on all other purchases; 25% savings on rentals at participating Alamo and National Car Rental locations; 24-hour access to Mastercard concierge staff and access to airport lounges. Plus, you can earn more money if you add another cardholder for $50 per year.

In terms of rewards offered, this card is close to similar cards, like the CIBC Dividend Visa Infinite.

Redeem rewards

Rewards associated with this card do not expire as long as your account is open and in good standing. You can redeem Cash Back in two ways: when there is a fixed amount available up to a minimum of $25 (which can be redeemed in $5 increments or as a one-time lump sum that requires a minimum cash back balance of $1). It’s pretty flexible, as you can redeem cash back as regularly as you want with a relatively low limit.

To redeem rewards, you must log in to your BMO Mastercard account. You have the option of depositing the money in a BMO chequing or savings account, placing it in an InvestorLine account or using it to pay off your credit card balance.

Rewards potential

The actual value of a cash back card is based on potential annual earnings. We’ve done the math for you by calculating what the average Canadian spends each year on each CIBC Dividend Cash Back Visa Infinite category. Forbes Advisor uses data from multiple government agencies to determine both basic income and credit card spending averages in various categories.

Forbes Advisor estimates total annual credit card spending at $27,851.70. Of that amount, grocery purchases total $7,536 per year, earning $315.36 in cash back. We factored in the $500 per month spending cap to arrive at this figure, earning 5% for the $500 per month and 1% thereafter. Gas is $3,360 per year, which earns $100.80 in cash back at the rate of 3%. Recurring bills are $2,436, which earns $48.72 at 2%.

From there, other purchases (such as meals, entertainment, online shopping, airfare, hotel stays, and miscellaneous expenses) make up the remaining $14,529.70. Assuming you earn the 1% base rate on these, that adds an additional $145.19 to your annual cash back. All of this brings the grand total of annual earnings to $610.07. Once you factor in the $120 annual fee, this card brings in $490.07 in net cash back earnings per year, and potentially more on that if you frequently spend on public transit or carpooling, since this purchase category alone earns an impressive 4% cash back.

Compared to similar cards such as CIBC Dividend Visa Infinite Card at $537.50 annual revenue, Scotia Momentum Visa Infinite Card at $491.14 annual revenue and SimplyCash Preferred Card from American Express at $458.03 $ in annual earnings, the BMO CashBack World Elite Mastercard seems pretty average. the pack, despite its flashy 5% cash back rate.

Overall, the card has a decent rewards program. After all, it’s easy to earn over $400 in rewards just by using it for groceries and gas. With that kind of rewards potential, we think it’s worth paying the $120 annual fee.

The Micro, small and medium enterprises (MSME) in India has had a tough few years. Rising inflation, soaring commodity costs, restricted access to formal banking capital, finance and credit, and the pandemic have left the sector reeling. According to government data, 5,079 businesses closed in fiscal years 2020-21 and 2021-22.

Such developments are discouraging considering the positive impact that MSMEs have on job creation and industrialization in rural and underdeveloped areas of the country. India’s MSME sector is estimated to contribute about 50% to the country’s GDP by 2025. It is also the second largest job generator in India, as of FY22, with over 111 million of people employed.

Siddharth MehtaCEO, Free loadsat down with Priya ShetSenior Anchor, YourStory Media to discuss MSMEs, loan eligibility for these businesses, and a new loan product called Merchant Cash Advance.

Reduce the merchant’s financial burden

Most MSME transactions are cash-based (given the low scale of operations, working style and limited financial management). Due to limited access to financial support through traditional means, small businesses often struggle to cover their employees’ salaries, bills, taxes, and EMIs in a timely manner. Also, as Siddharth pointed out, business owners don’t have time to go to a bank or fill out paperwork because they lack the time to run a business. Also, the problem with the banks was that they were not able to reach this segment and understand how to guarantee these customers due to the lack of information in place.

Keeping this in mind, Freecharge has launched a new product – Merchant Cash Advance (MCA) in association with Axis Bank. MCA comes with a free Axis Bank current account where the merchant or customer can contact the branch for any assistance or questions regarding the loan.

This product aims to broaden the scope of loan eligibility for micro, small and medium-sized (MSME) traders and reduce the burden of heavy monthly repayments. MCA is designed to provide these traders with the necessary working capital as well as easy repayment options. Businesses can digitally apply for loans ranging from Rs 5,000 to Rs 5 lakh depending on their transaction history on the Freecharge platform and their CIBIL score.

MCA also offers MSME business owners a feature known as Easy daily payment (EDI) whereby installments are deducted in small amounts from their daily QR settlements, eliminating the burden of paying a heavy installment at the end of the month. This digital product does not require any documentation except for Aadhaar and PAN details and allows businesses to choose their loan term.

“The idea is that you use this loan to scale your business capabilities, expand inventory in your stores and grow your business,” Siddharth said.

Target micro to small businesses

According to Siddharth, a large part of MSME lending goes to medium and large enterprises. This leaves micro and small businesses on the sidelines. The MCA product aims to pave the way for small businesses with instant digital loans. Small businesses can apply with very little paperwork and the loan is disbursed in 10 minutes. Additionally, Freecharge has worked on the right pricing of the loans, offering some of the lowest interest rates in the segment. Finally, merchants can use the free bank account for all their business activities except lending. The EDI functionality will also serve microentrepreneurs well, allowing them to repay their loans as they come along without disrupting their working capital or cash flow.

Build trust in the lending space

The road to recovery will be paved by the digitization of financial products and services. Already, these products facilitate remote transaction management, seamless delivery of products, and easier access to services. It will also help create better customer experiences and a smoother customer journey. MCA offers clean processes, on-time loan disbursements and daily collection of loan amounts. All of this will go a long way in building trust with MSME traders. Moreover, with Axis Bank, traders also have an extensive network of bank branches where they can go to clear their doubts.

Over the past five years, Freecharge has been working to strengthen their financial capabilities and services, such as BNPL (Buy Now Pay Later) loans for their customers, or an FD express on the Freecharge platform. Currently, the company has made plans to add more product variants to the MCA and refine the user experience based on the traction it sees in the future.

You can watch the full interview,

Restaurant software and payment platform The view launched a new solution that offers cash advances to restaurants.

New Lavu Capital the offer is powered by an integrated FinTech company Paraffin and gives restaurants “easy access to quick capital,” according to a Wednesday (September 28) Press release.

“It’s frustrating how many restaurateurs don’t qualify for traditional loans despite having a strong track record,” the Lavu CEO said. Saleem Khatri said in the press release. “The same way we’ve helped thousands of restaurants quickly switch to online ordering to survive the pandemic, we’re launching Lavu Capital to help more restaurants keep their doors open during tough times.”

With Lavu Capital, there is no need for a credit application or check, and there are one-time capital charges rather than interest, according to the release.

In practice, restaurants can view their pre-approved advance, select a principal amount and verify their bank details in order to accept the cash advance, the statement said.

After accepting, the restaurant receives the money within a day or two, pays a one-time flat capital fee based on the amount of capital accepted, and makes automated payments based on a percentage of sales on a set payout schedule. according to the version. .

Restaurants can use the cash advance for any business expense, according to the release.

“Our mission at Parafin is to grow small businesses by making it easier and faster to access financial services, starting with capital,” said Parafin’s CEO. Sahill Poddar said in the press release. “We are honored to work with platforms like Lavu who are heavily invested in growing the thousands of restaurants they work with, to fulfill this mission.”

The announcement comes about two months after Parafin, a FinTech launched in 2020 by Robinhood Markets veterans, raised $60 million in a funding round.

Read more: FinTech Parafin raises $60 million

“When we started the business during the pandemic, we noticed that small businesses weren’t getting the help they needed,” the Parafin co-founder said. Vineet Goel said at the time. “We want to be the one-stop-shop for these platforms to offer a variety of financial products.”

Qurate Business Intelligence recently published a research report titled “Global Merchant Cash Advance Market (COVID 19 version) ». According to the information, the market can become an important industry that plays a vital role in the positive impact of the world economy. The Global Merchant Cash Advances Market Research Report (COVID 19 Version) represents a dynamic picture in order to conclude and study the market Cutmarket share and competitive landscape. The research study is obtained from extensive primary and secondary research which consists of qualitative and quantitative analysis. The report also gives 360 degree overview of the competitive landscape of industries. SWOT analysis was used to understand the strengths, weaknesses, opportunities, and threats to businesses. The merchant cash advance market is showing steady growth and CAGR is expected to improve over the forecast period.

Key Players of the Global Merchant Cash Advance Market Covered are:
Financial Forum
Credible
Capital CAN
American Express Merchant Funding
National funding
Box
Stripes Capital
CanCapital
Cabbage
Square capital
PayPal working capital
Lendio

On the basis of types, the Merchant Cash Advance market from 2015 to 2025 is majorly split into:
$5,000 to $250,000
$250,000 to $500,000
> $500,000

Based on applications, the Merchant Cash Advance market from 2015 to 2025 covers:
Time spent in business 18 months

We surveyed several major sources of supply and demand in the development of Primary researchh. It is to acquire qualitative and quantitative data associated with the Merchant Cash Advance report. The major sources of supply involve major industry members, subject matter experts from key market players, and consultants from various key companies and firms operating in the global Merchant Cash Advance market.

Merchant Cash Advance Market Regional Coverage (Regional Production, Demand & Forecast by Countries etc.):

• North America (S., Canada, Mexico)
• Europe (Germany, UK, France, Italy, Russia, Spain, etc.)
• Asia Pacific (China, India, Japan, Southeast Asia, etc.)
• South America (Brazil, Argentina, etc.)
• Middle East and Africa (Saudi Arabia, South Africa, etc.).

Merchant Cash Advance Secondary research was conducted in order to acquire vital information on corporate supply chain, corporate monetary system, global corporate pools, and sector segmentation. It is with the lowest point, regional area, and tech-focused viewpoints. Secondary data was collected and analyzed to reach full Merchant Cash Advance market size.

Free report data (in the form of an Excel data sheet) will also be provided upon request with a new purchase.

Key questions answered by the report:

• What are the key factors according to primary and secondary research?
• What is the future scope of the market?
• Who are the end users of the Merchant Cash Advance report?
• What are the types of challenges and factors hindering the development of the industry?
• What is the market size, share, and product supply chain analysis?
• What is the manufacturer’s potential support in the competition.
• What are the benefits, benefits and features of the product?
• What is the significant trend and drivers of influencing factors?

Contents

• Chapter 1 Details the information relating to Merchant Cash Advance introduction, Scope of the product, market overview, Market risks, driving forces of the market, etc.
• Chapter 2 analyzes the major manufacturers of the Merchant Cash Advance Market by sales, revenue etc. for the forecast period 2022 to 2030
• chapter 3 To analyze the competition landscape among top manufacturers based on sales, revenue, market share etc. for the period 2022 to 2030.
• Chapter 4 defines the global merchant cash advance market by regions and their market share, sales, revenue etc. for the period 2022 to 2030.
• Chapters 5 to 9 Analyze the Merchant Cash Advance regions with Merchant Cash Advance countries based on market share, revenue, sales etc.
• Chapter 10 and 11 contain the knowledge regarding the basic types of market and their application, sales market share, growth rate, etc. for the forecast period 2022 to 2030.
• Chapter 12 focuses on the market forecast for 2022 to 2030 for the merchant cash advance market by regions, type and application, sales and revenue.
• Chapter 13 to 15 contain the transient details associated with sales channels, suppliers, merchants, dealers, search results and conclusion, etc. for the merchant cash advance market.

Contact us:
The Web: www.qurateresearch.com
E-mail: [email protected]
Telephone: United States – +13393375221, IN – +919881074592
https://www.linkedin.com/company/qurateresearch/
https://twitter.com/QurateBi

Note – In order to provide more accurate market forecasts, all our reports will be updated prior to delivery considering the impact of COVID-19.

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The Washington, DC attorney general filed a consumer protection lawsuit against Liberty Tax accusing the tax-prep chain of misleading consumers with misleading ads and promotions and predatory pricing.

DC Attorney General Karl Racine’s office filed a lawsuit Wednesday against Liberty, which is the nation’s third-largest tax-prep chain. The lawsuit alleged that Liberty aggressively marketed its services to low-income DC residents by offering them $50 cash “just for the deposit,” but then increased tax preparation fees for customers who accepted the cash payments. He accused the tax preparation channel of violating DC’s consumer protection laws and is seeking a court order requiring Liberty to provide accurate and truthful information and provide financial relief to thousands of consumers, as well than civil penalties.

“We filed this lawsuit to stop Liberty Tax from unlawfully preying on DC’s most vulnerable low-income residents,” Racine said in a statement. “Now is the time for Liberty Tax to be held accountable for persistently and fraudulently inducing DC residents to overpay for tax preparation. Misleading consumers is illegal, and we will not allow businesses to profit by deceiving the residents of the district.” (Full disclosure: Racine was a classmate of this writer.)

Liberty has had a checkered history in recent years. Its founder, John Hewitt, who previously co-founded the tax-prep chain Jackson Hewitt after working as an executive at H&R Block, was ousted from the company in 2019 after a sex scandal involving company employees, which had to solve a sexual problem. lawsuit for harassment (see the story). The company’s then-parent company, Franchise Group Inc., also settled a lawsuit with the IRS and the Department of Justice alleging that Liberty failed to maintain adequate controls over returns prepared by franchisees and failed to prevent the filing of potentially false or fraudulent statements by franchisees (see the story). Last year, Liberty Tax was acquired by NextPoint, a special purpose acquisition company, for $182 million in cash and $67 million in stock (see the story). A spokesperson for NextPoint Financial did not immediately respond to a request for comment on the DC attorney general’s lawsuit.

To entice consumers, according to the lawsuit, Liberty Tax aggressively promoted immediate distributions of $50 “just for filing with Liberty Tax” at the start of tax season before the end of February. Liberty Tax called it “cash in a flash” and described it as a “benefit” with no downside. The company has widely featured “fast cash” on its own website, in online videos, and by placing signs with signs such as “GET $50 NOW” outside of its stores, which are mostly located in low-income neighborhoods. However, the company did not disclose that consumers who accepted cash would be charged more than those who did not. On average (depending on the forms they filed), consumers who accepted the $50 offered by Liberty were then charged between $67 and $200 more for tax preparation services than consumers who did not. not participated in the promotion.

Liberty operates four locations in DC where it provided more than 12,000 cash payments to consumers as part of its “cash in a flash” promotion from 2015 to 2021, according to the AG’s office, raising prices than thousands many DC consumers have paid for tax preparation without their knowledge, especially low-income taxpayers. On average, according to the AG office, Liberty charged people who file simple returns with just a 1040 and a W-2 an average of $75 more if they accepted the $50 in cash. However, it charged people who received the earned income tax credit an average of $93 to more than $200 more than EITC recipients who did not take up the 50 cash promotion. $.

THIS entrepreneur was able to turn $100 into $10,000 in ten days with pure contactless hustle and a dented car.

The lifestyle Grant Cardone, 64, lives is very different from the one he had growing up and he likes to flaunt his million-dollar penthouses and private jets on social media.

He starred in the second season of Undercover Billionaire, a television show challenging successful business owners to build a million dollar business in 90 days or less.

During the show, you only get three things to start: a dented car, a contactless phone, and $100 cash.

Cardone was placed in Pueblo, Colorado, away from his high-rise penthouse in Miami.

Somehow he managed to turn $100 into $10,000 and the first step he took was to try to make contact as soon as possible.

In a bold move, Cardone, who changed his name to Lewis Curtis during the challenge, asked the owner of a motorhome rental business to sleep in one of his trailers.

The next day, he asked about potential business opportunities in the area and got contact details for a business owner named Matt, who ended up becoming Cardone’s main business partner during the challenge.

After making contact, Cardone then shows up at Matt’s gym, asking “How can I help?”

People might initially be skeptical of you, especially if they don’t know you – as was the case between Cardone and Matt, but Cardone pushed on and believed he could bring value to Matt.

Cardone presents a master trick: work for free when you start.

According to Cardone, it shows your partner that you prioritize the business over yourself.

And, once you show you can keep a promise, it becomes easier to ask for a bigger salary than you would have asked at the start.

However, proving yourself means more than just words.

Cardone was able to secure a $5,000 marketing budget from Matt, who also owns a mattress store, however, Cardone struggled when no customers showed up.

To remedy the situation, Cardone came out onto the main road with a sign and put on his pajamas which caught the attention of several motorists.

This resulted in sales of $12,000 that day.

Matt and Cardone were able to strike a formal business deal, giving Cardone a 15% commission on all sales he made.

Cardone walked out of that meeting with a check for $10,000 after the couple agreed to a cash advance.

In just 12 days in Pueblo and 10 days on the job, Cardone had earned his goal of $10,000.

“Never lower your aim,” Cardone said. “Increase your actions.

2

(NerdWallet) – If you’re asked to imagine a payday lender, you might think of a storefront in a strip mall with green dollar signs and neon slogans like “everyday payday.” You probably wouldn’t imagine a mobile app that advertises on TikTok and sports a colorful logo.

But cash advance apps like Earnin and Dave provide advances with the same borrowing and repayment structure as payday lenders, and consumer advocates say they carry similar risks. Both are quick, no-credit-check options for closing an income gap or easing the pressure of inflation.

Neither is an ideal first choice for borrowing money quickly, but knowing their differences can help you save money and avoid hurting your finances.

Cash advance apps work like payday loans

Like most payday loans, a cash advance or paycheck app lets you borrow money without a credit check. You are also required to repay the advance, plus any fees you have agreed, on your next payday.

A single payment cycle is usually not enough for borrowers to repay payday loanso many people fall into the habit of getting another loan to pay off the previous one, says Alex Horowitz, senior director of The Pew Charitable Trusts.

App users may find themselves in a similar cycle. A 2021 study by the Financial Health Network found that more than 70% of app users get back-to-back advances. The study doesn’t say why users re-borrow, but Horowitz says the behavior is particularly similar to payday loans.

“Direct-to-consumer payday advances share DNA with payday loans,” he says. “They’re structured the same, they have repeat borrowings, and they’re scheduled based on the borrower’s payday, which gives the lender strong collectability.”

Apps can offer more flexibility

Payday lenders and payday advance apps collect repayment directly from your bank account. If your account balance is too low when funds are withdrawn, you could incur overdraft fees, says Yasmin Farahi, senior policy adviser at the Center for Responsible Lending.

An application may try to avoid overcharging your account. Mia Alexander, Vice President of Customer Success at Dave, says the app reviews users’ bank accounts before withdrawing the refund. If the refund puts the balance close to zero or negative, the app may not withdraw the funds, she says.

However, apps typically include language in their user agreements that while they try not to overcharge your account, they aren’t liable if they do.

In states where payday loans are allowed, a payday lender is unlikely to offer a free, unsolicited payment extension, as some apps say. Some states require payday lenders to offer extended payment plans at no cost to troubled borrowers, but a 2021 report from the Consumer Financial Protection Bureau says some lenders are misrepresenting plans or not disclosing them.

Unlike payday lenders, the apps don’t make collection calls. If a user revokes access to their bank account to avoid a refund, the app will not attempt to collect the funds. The user simply cannot get another advance until they repay the previous one.

Payday loans cost more

Payday loans tend to have high mandatory fees, unlike apps. Instead, they charge a small fee that users can accept throughout the borrowing process. These fees can add up, but they are usually lower than those charged by payday lenders.

For example, an app might charge a monthly subscription fee or a fee for instant access to funds. Most cash advance apps also ask for a tip for service.

The charges on a $375 payday loan are most often about $55 over a two-week period, Horowitz says. Since the cash advance application fee is mostly optional, you can easily keep the cost below $10.

Earnin user Sharay Jefferson says she’s used payday loans in the past, but switched to a cash advance app because it’s a cheaper way to cover bills and unexpected expenses.

“If you get a $200 payday loan, you might be paying something back three times over,” she says. “With Earnin, I’m going to have to pay that $200 back, plus whatever I decide to give them. It’s much cheaper. »

Technically, apps are not lenders

Regulators like the CFPB have not classified payday advance apps as lenders, despite their similarities to payday loans.

Earnin CEO and Founder Ram Palaniappan says the app is more like a payroll service or an ATM because it makes it easier to access your own funds. Earnin asks users to upload a timesheet showing they worked enough hours to earn the cash advance amount. Other apps scan a user’s bank account for income and expenses to determine if they qualify for an advance.

Farahi says applications should be treated like creditors, meaning they would follow the Truth in Lending Act, which requires creditors to disclose an annual percentage rate. An APR allows consumers to compare costs between financing options. For example, users can compare the APR of a cash advance app to that of a credit card and choose the most affordable.

“People still need to know what the real cost of credit is and to be able to assess it and really compare that cost to other options,” she says.

Applications should also comply with applicable state lending laws. Currently, 18 states and Washington, DC, have maximum interest rate caps that could limit application fees, she says.

Cash Advance App vs Payday Loan: Which is Better?

If you need cash urgently, you can have better alternatives than payday loans and advanced apps, says Farahi.

Local charities and nonprofits can meet basic food and clothing needs. A family or friend could lend you money at no additional cost. If you have a few hours to spare, a side gig could generate as much money as a typical payday loan or cash advance application.

If you have the choice between an app and a payday loan, the app is probably the best option because:

• It is less expensive.
• It may not trigger overdraft charges.
• If you don’t pay it back, the app won’t send you to collections.

A cash advance from an app is unlikely to leave you in a better financial position, Farahi says. But it may be a little less likely than a payday loan to make things worse for you.

It’s not always a bad idea.

Key points

• Credit card cash advances come with high fees and interest rates.
• Usually, you should try to avoid a cash advance.
• There may be circumstances where getting one isn’t the worst idea, such as if you’re using it as an alternative to an expensive payday loan for an emergency expense.

Most of the time when you use your credit cards, you charge for purchases. But there is actually a way to withdraw money from your credit card: you can do it by taking a cash advance. Often this just means going to the ATM or bank and asking for one.

Taking out a cash advance might be a good solution if you have an essential expense that you can’t charge to your card and can’t afford to pay. But, in reality, there are serious financial drawbacks to doing so.

That doesn’t mean you should never take out a cash advance – but before you do, you should seriously ask yourself if it’s the right decision.

There are good reasons to avoid cash advances

In general, cash advances should be avoided as they can be a very expensive way to get cash.

You will usually be charged an upfront fee when taking a cash advance, which can range from around 3% to 5% of the amount borrowed. The interest rate may also be higher on a cash advance than your standard card rate, and you’ll usually start earning interest immediately. This is different from when you charge items to a credit card, because you don’t have to pay interest on items charged if you pay your balance in full before your grace period.

You may also not be able to borrow as much with a cash advance, as there is often a lower limit that applies. For example, if you have a $10,000 line of credit, you may only qualify for a cash advance of up to $4,000 or whatever your card issuer sets as a limit.

So, since a cash advance will cost you more and be more restrictive than simply charging something to your card, you generally shouldn’t do it.

Here’s when you might want to consider grabbing one anyway

While a cash advance should always be avoided in a perfect world, the reality is that sometimes people find themselves in financial binds and need help getting out of it. And a cash advance could be a way to do that. if alternatives will cost you more.

Say, for example, you need $500 to fix your car today and the mechanic won’t take a credit card. If you have no other way to pay for car repairs and you won’t be able to get to work and would lose your job, a cash advance might be an option if you plan to pay the money back quickly.

Or if you’re considering a payday loan to pay for an essential expense like covering your rent until your paycheck arrives, a cash advance may be cheaper.

Basically, as these examples are designed to illustrate, if you’re stuck in a corner with no other way to borrow and the consequences of not taking a cash advance would outweigh the costs of taking care of you, you have this option available. If you exercise it, however, you will want to make a plan to pay the money back as soon as possible. and a plan to make sure you won’t need to do this in the future – like saving an emergency fund.

Ultimately, cash advances are a financial tool at your disposal. But since they’re so expensive, save them for serious emergencies and do what you can to make sure you don’t end up in that situation.

“Cash Back” generally refers to cash rewards that cardholders can earn when they complete a transaction with a credit card. It should not be confused with cash back which you can withdraw from a bank account when paying using a debit card. This is also distinct from using a credit card to withdraw money from an ATM, which is called a cash advance and is not a recommended practice.

Many credit card issuers offer cash back programs that cardholders can take advantage of to see a small return on every purchase made. While earning rewards certainly shouldn’t be an incentive to overspend on a credit card, it’s worth knowing exactly how specific rewards can be earned and redeemed. Different rewards programs offer different reward rates, and some impose limits on which spend categories earn which rates, so it’s important to understand the terms and conditions of your credit card rewards before deciding which credit card. ask.

How does cashback work?

A cash back card will generally allow cardholders to earn rewards with every purchase made with the card. Some may earn a fixed percentage on every qualifying purchase, while others offer high earn rates on bonus categories such as groceries, gas, or restaurants. Accumulated rewards are redeemable for cash, often in the form of a check, credit statement, or deposit to a bank account.

How does cash back work with credit cards?

Some cash back credit cards reward all qualifying purchases with a flat percentage return, such as 1.5% or 2% back on all spend. Others offer tiered reward categories to reward spending, for example, on groceries and gas at higher rates than other purchases. Yet other cards offer rotating redemption categories every month or every quarter.

Flat Rewards

Certain cards, such as the Wells Fargo Active Cash® Card (tariffs and fees), offer a one-time reward on all qualifying purchases. The Wells Fargo Active Cash earns 2% cash rewards on purchases and remains the plastic standard for block rewards. For those looking for simple, easy-to-follow cashback, a card like this is likely to be one of your best options.

Earn multi-level rewards

Other cards, like the Blue Cash Preferred® card from American Express, offer a more complex structure for earning rewards. Blue Cash Preferred earns 6% cash back in US supermarkets on up to $6,000 per year in purchases (then 1%), 6% cash back on select US streaming subscriptions, 3 % cash back at US gas stations and on public transportation (including taxis/rideshare, parking, tolls, trains, buses and more) and 1% cash back on other qualifying purchases. Cash Back is received in the form of Reward Dollars which can be redeemed as statement credit. The card has an annual fee of $95 (conditions apply, see rates & fees).

While cards like this generally offer bonus categories that yield higher rewards, the lowest reward category or “catch-all” category for all out-of-bonus category purchases is usually only 1% back and will not match what you might earn. with the best flat rate cashback cards.

Reward Category Rotation

Some cards will split cash back rewards between spend categories that change on a quarterly (or other period) basis. For example, Discover it® Cash Back earns 5% cash back on everyday purchases at different locations each quarter up to a quarterly maximum of $1,500 in spend when activated. Plus, automatically earn unlimited 1% cash back on all other purchases.

Please note that some cards require a category to be activated every quarter or month before you can actually earn rewards on purchases in the category. And, as reward categories change, cards with rotating reward structures may require additional attention given to reward systems in order to realize the full potential of rewards in each bonus period.

Other constructions

The Chase Freedom Flex℠ is an example of a card that combines several approaches. The Freedom Flex earns 5% cash back on up to $1,500 in categories that rotate quarterly (requires activation), 5% on travel purchased through Chase Ultimate Rewards®, 3% on restaurants and pharmacies and 1% on all other purchases.

Still others, like the Citi Custom Cash℠ card, offer categories that change based on your spending habits: the card earns you 5% cash back on purchases in a higher eligible spending category each cycle of billing, up to the first $500 of spend each month and 1% cash back on all other purchases.

Cash Back vs. Cash Advance

Cash back should not be confused with a credit card cash advance. Although the term “cash back” is often applied to a withdrawal of funds from a checking account in the same transaction as a debit card purchase, for example, at a grocery store, this type of “cash back” is all something else with a credit card. Cash advances allow you to borrow money from your credit card’s line of credit by withdrawing cash from an ATM using your credit card.

Cash advances typically involve a separate cash advance APR, often higher than your card’s regular APR, and start earning interest the same day you borrow the money, with no grace period. There will also usually be cash advance fees. Cash advances are not recommended because the cost of borrowing money in a cash advance is usually astronomical compared to other options to get the funds you need.

How can I withdraw money from a credit card?

Making a cash advance with a credit card often incurs fees and a high APR, and does not include a grace period to pay off the balance before interest accrues. We don’t recommend taking a cash advance, but if you must, you can use your credit card at an ATM just like you would a debit card. Be sure to read your card contract carefully to understand all the terms of a cash advance before initiating a transaction.

How do I redeem Cash Back?

While the specifics vary from issuer to issuer, you’ll typically redeem cash back earned with your credit card by applying through an issuer’s app or website. Log in to mobile or online banking and apply to redeem rewards.

With many cards, you’ll be able to choose your preferred redemption method for your cash back: you can receive your rewards as a statement credit, a deposit to an eligible bank account, or a check that the issuer sends you job. Some cash back cards also allow you to redeem cash back by applying it to purchases when checking out online with a partner.

Note that in some cases your cash back will be redeemed automatically and you will not have the option to select your preferred option. For example, with the American Express Blue Business Cash™ card, any cash back you’ve earned is automatically applied as a statement credit each billing cycle.

Below are details of commonly available redemption methods for your cash back.

Check

Some issuers can pay out rewards by sending you a check. Depending on your card agreement, a check may be automatically sent from time to time or you may need to request one. A check can also be an optional redemption method alongside other choices. Checks can be one of the slowest methods of exchange, as you wait for a physical item to arrive in the mail.

Statement credit

Another redemption option offered by many issuers is cash back in the form of statement credit. Certainly one we often see in the credit card agreements we review, statement credit puts your money back directly into your credit card account by subtracting the amount of rewards you redeem from your balance. This type of buyout option usually takes the least amount of time.

Bank transfer or direct deposit

Some issuers, especially banks that also offer checking and savings accounts, will offer wire transfer or direct deposit as a way to complete your rewards redemption. You can redeem rewards as a deposit into a checking, savings, or other type of eligible cash account and many issuers make this a fee-free and fairly straightforward process.

Gift cards

Gift cards are often listed as a redemption option for cash back, but be aware that redeeming gift cards may offer less value per reward point or dollar than other redemption options. Gift cards can also limit your options when redeeming. As a general rule, we recommend redeeming rewards for the closest thing to cash.

Conclusion

Cash back credit cards earn rewards on qualifying purchases and can be a lucrative advantage to paying with a credit card. Earning and redeeming cash back involves nuanced terms that you need to understand before applying for a cash back credit card.

It should also be noted that “cash back” as it is used to refer to the withdrawal of cash at a merchant’s point of sale with a debit card is not the same with a credit card. Using a credit card to withdraw money from your revolving line of credit is called a cash advance and is generally not the most affordable way to borrow money.

To view rates and fees for the Blue Cash Preferred® Card from American Express, please visit this page.