Payday loans are sometimes also known as cash advances, payday advances or paycheck advances. These financial products are short term loans, where the amount varies from $100 to $500 but the amount can sometimes rise to $1500. A borrower can expect to pay from $15 to $30 per $100 borrowed. When thought of in terms of APR the rates are between 300 to 800 percent.

Payday loans have received a lot of bad press recently. This is mostly due to the questionable practices done by payday loan institutions. The practice that receives the most amount of criticism is the high rates of interest of paycheck advances. The high rates of interest are placed because the loan amounts are smaller than traditional loans and borrowed over a short amount of time and this means that payday advance institutions would not make any profit by charging rates similar to typical loans.

Another reason cash advances are sometimes considered scams is that borrowers can sometimes end up stuck in a spiral of debt and it can sometimes be difficult to pay back the loan. Because of this, customers must ensure they have the funds in place to clear the debts on their next payday. It is very important that customers have a financial plan set up and do not apply for a payday loan (or any loan) without thinking it through first.

As you can see, it is easy to see why payday loans are sometimes criticized. However, most applicants who apply for payday loans have already tried all other options available to them and most of the time, the only solution they have left to solve their cash flow problem is to obtain a payday loan. In this situation payday advances can be a good option and actually will save the borrower money when compared to credit card charges.