The Federal Trade Commission has branded cash advance loans with the label of ‘costly cash'. An article on their web site explains ‘alternatives to cash advance loans' that they claim are less expensive in the long run. The only problem is that the FTC is not looking at the reality of those who turn to cash advance loans to help them handle an emergency cash need – nor are they being realistic about the costs of the alternatives that they suggest.

Are cash advance loans dangerously costly? When used the way they are intended to be used – a quick, one-time solution to a temporary cash-flow problem – cash advance loans are a cost-effective way to get yourself out of an unexpected cash emergency that could have disastrous effects. The problem comes in when the loan is extended – or rolled over – for additional weeks. Rolling the loan over is the same as taking out another cash advance loan – you pay the same fee again. If you take out a loan of $500, it will cost you $50. If you extend the cash advance loan three times, you'll end up paying $150 in loan fees.

So what about the alternatives to cash advance loans suggested by the FTC? Take a look at them:

1. Seek a loan from a traditional source like a credit union, bank or loan company.

Few traditional loan sources are willing to extend such small loans. They also require a credit check which can take several days. By contrast, companies that offer fast cash advance loans only require that you have steady employment and a bank account, and will have the money to you within hours of your application.

2. Ask your creditors for more time to pay the bill and find out what it will cost you for a late payment.

Realistically, it could cost you much more to make a late payment to a creditor or utility company than it will cost you to take out a cash advance loan. A late payment fee on your credit card account can be as much as $29 AND raise your interest rate to as high as 29% APR. Not only will it cost you money out of pocket to make your payment late, but you'll be paying extra finance charges for as long as you use that credit card. It's a lot less expensive to pay a one-time cash advance fee of $10 per $100.

Cash advance loans also make sense as a way to avoid losing utilities and paying reconnection fees on them. In a situation where you can pay your bill when you get paid on Friday, but the gas company wants their money today, a cash advance loan can mean the difference between keeping your utilities on for just the past due amount and having to pay the full bill, plus a reconnection fee and a security deposit to have them reconnected when you get paid.

The FTC's final bit of advice regarding cash advance loans is a good one: Only borrow as much as you can afford to pay back on your next payday.

Cash advance loans are not meant to be long term solutions to your financial problems. They are exactly as advertised – a way to get out of an unexpected financial crisis. Used wisely, they can help you get through a cash flow crisis without getting dragged under.