In the past, short-term online cash advances were one of the few money options available to those who fall into the “non-prime” lending category. This category is also known as sub-prime or second-chance lending because of a low credit score. The people who fall into this category are those who are looked at as risky candidates for new credit. Most credit card companies would steer clear of this category many years ago, but lending opportunities are changing and people in this category are now being targeted.
Creditors are finding that focusing new opportunities to people who fall into this category will mean large profit numbers for their company. Those with limited third party money may stop using cash advances online for fast cash and begin to apply for new credit lines. Revolving credit is much more affordable than paying in full a few weeks later. A person struggling with debt or living paycheck to paycheck will gobble up the opportunities for a new credit card.
Would you avoid using cash advances if you could?
Credit card companies are not going to ignore profitability. What was once a small portion of credit opportunities for the non-prime applicant are now a big percentage of company earnings. The creditors will continue to try and capitalize on a given population as long as they are making money. Part of the targeting techniques used is offers sent in the mail for low interest rates or rewards programs. People looking for something when they are used to having nothing will be nothing but super excited to see that they are “pre-approved” for a new line of credit.
Most folks who are desperate to feel some financial relief will not be reading the fine print nor will be looking for the catch to the special offer which they just received. Those who have fallen behind on cash advance payoffs or have gotten utility shut down notices will probably not be thinking of negatives while signing on the dotted line. This is the scenario that creditors are hoping to catch in order to improve profits.
The credit bureaus have seen a gradual increase in debt this past year with combinationing increasing late payments. Interest rates inflate with problem accounts in order to make up for the accounts which are not paid in all. In other words, those people who struggle and make payments towards their debt are paying more in interest to make up for the loss created by those who do not work as hard. No matter where the deficit falls, the creditors will find a solution to make up the loss. Credit card companies still receive billions in profits each year as the general population continues to struggle in debt.
Non-prime applicants welcome the opportunity to have something more than short-term cash advances available for fast cash. Revolving credit card accounts are attractive because long-term monthly payments are more affordable than the high interest short-term loans. Be careful when looking for help to get out of financial troubles. When it comes to borrowing money, nothing is free with a third party lender; and when something seems too good to be true, stop and think twice before acting upon it.
