The Top Mistakes To Avoid When Taking Out a Cash Advance

You know the feeling. You’re thiiiis close to payday. And then your car starts crying out for gas. If you’re looking to avoid shady payday loans and swerve overdraft fees, here’s where a cash advance comes in.

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If your bank account is running dangerously low right now, you could get a spot of up to $250 with Cleo.* No credit checks. No interest. No stress.

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What's a cash advance?

A cash advance, or money advance, is a way of getting quick cash that’s calculated against your income or credit limit, depending on where you get it from.

You can get a cash advance at an ATM, through a convenience check, or through online services like cash advance apps.

Cash advance apps are often designed for speed of use. Involving very little paperwork, and accessible within a few days. Or even the same day.

However, not all money advances were created equal. Just because cash advances can be a safer option than, say, a payday loan with 600% interest, you should still do your research.                  

And watch out for these common mistakes.

1. Not Understanding the Fees and Interest Rates

Money advances often come with lower interest rates than payday loans. Many cash advance services even offer 0% interest (like, ahem, Cleo).

But not all of them do. So it's important to read the terms and conditions carefully and understand how much you'll be charged.

Before taking out a money advance, take the time to read the terms and conditions and understand how much you'll be charged. Calculate how much you'll have to repay, including fees and interest. We have a whole article on calculating the true cost of a cash advance.

With Cleo, because there’s 0% interest, if you borrow $80, you repay $80. If you pay to access it same day, that’s $83.99. It’s that simple.

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2. Accessing More Than You Can Afford

With some cash advance services, especially if they charge an interest rate, a cash advance may still be hard to repay.

Make sure to find a cash advance that works for you with the lowest interest possible, and never take out more than you need.

With Cleo, the amount you’re eligible for is calculated against your income, so you’re more likely to be able to afford repayment. You can also choose the repayment date that works for you.

Plus, you get access to a ton of free features that eventually help you not need cash advances. Like a personalized budget.

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Here’s how it works:

💙 Get connected

Download Cleo for free, sign up, and connect your main checking account.

Select the Budget tab, then under Next Steps just tap on each icon to customize.

💙 Income

Select your latest paycheck or paychecks so Cleo knows when you get paid.

💙 Bills

Add your bills so Cleo can track them for you. And you don’t have to. Yw.

💙 Spend limit

Set a realistic spend limit. Like, an amount you definitely don’t want to overspend on.

Once you’re done customizing your cute budget, you’ll unlock your ‘left to spend’ and ‘left per day’ amount, so you can comfortably get your Starbucks without The Guilt lingering over you 😌

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3. Using Cash Advances for Non-Emergencies

Cash advances should only be used for emergencies or unexpected expenses, such as car repairs or medical bills. Using them for non-essential expenses like shopping or entertainment can lead to a cycle of debt that can be difficult to escape. As tempting as it is.

Before taking out a cash advance, do a little flow chart in your head. Do you really need the thing you’ll spend the money on? Ok, you’ll probably wanna go ahead with the cash advance. Do you just really want the thing you’ll spend money on? That’s a different story. Sleep on it and consult the flowchart again.

Luckily, with Cleo, as well as a personalized budget, you get access to autosave.

You tell Cleo how much you wanna put into your savings. Each week, if you have enough money, Cleo will confirm with you, and put some money aside for you to transfer to savings. You just have to sit back and watch your savings stack up.

With your personalized budget, you can see where your money is escaping to each month, and instead put unnecessary spending towards the thing you really want. And with autosave, you can build an emergency fund so you eventually don't need cash advances.

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4. Taking Out Multiple Cash Advances

Taking out multiple cash advances can lead to a debt spiral that's difficult to escape. It's best to avoid taking out multiple loans and focus on paying off any outstanding debts.

If you're struggling with debt, check out our financial advisor Anna Yen's article on what to do. You can also download Cleo for free to create a budget, and get a picture of your monthly finances.

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How to get a cash advance with Cleo

With Cleo there’s no interest, no credit check, and no proof of income required.

It’s as simple as this:

1. Download the app for free (at this point, you get access to all of Cleo’s free budgeting and saving features)
2. Connect Cleo to your main bank account (just so we can calculate your eligibility)
3. Find out if you’re eligible
4. Decide if signing up for Cleo Plus is right for you
5. Confirm your details so we know you’re human
6. Choose when you want the money
7. Choose your repayment terms

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_{*The Cleo Plus subscription offers saving goals, hacks, challenges, APY on savings, credit score insights, and access to cash advances if eligible.}