By John Campbell

If you ever need a cash advance, ideally you’ll be able to pay back the advance when you get your next paycheck. Fail to do so and you’ll wind up spending a lot more money paying back the loan than you may have ever anticipated.

Although cash advances are intended for occasional use when emergencies arise, many consumers who take out an advance are unable to pay it back when they receive their next paycheck. Not paying back the advance forces them to rollover the loan. When you roll over a loan you are essentially renewing it, which may double the interest and other assorted fees you may owe on top of the principal amount owed.

With each rollover, what may have started out as a small debt begins to grow uncontrollably. In some cases, consumers have been forced to take out additional cash advances just to pay the associated fees and interest from another loan. If you end up with a cash advance causing you massive debt you could be buried financially.

According to statistics from the Center for Responsible Lending, 91 percent of all cash advances are made to borrowers who take out five or more cash advances a year. Estimates at the standard rate of default on these loans range from a staggering 20 - 25 percent.

If the cash advance is slated to be repaid by an electronic deduction from your bank account, you don’t have sufficient funds and you forget to roll over the loan, you could end up with overdraft fees or have your bank account closed if the account is hit with several overdrafts from other transactions.

You can avoid overdrafts by simply not providing cash advance companies with electronic access to your account. According to the Electronic Funds Transfer Act, giving a cash advance company electronic access to your account is not legally a condition for being provided credit.

The law may not be on your side if you default on your loan. In some states, you could be sued and your wages could even be garnished until your loan is paid off. Some cash advance companies have even went so far as to file criminal charges against borrowers who aren’t able to repay their loans.

Unlike traditional loans, a cash advance needs to be paid back immediately, if possible. If you don’t you could end up in a greater financial emergency than the one you took out a cash advance to take care of in the first place.

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John Campbell is the writer and editor of CashBuzz, A financial portal for the rest of us. Check out cashbuzz.com for the latest articles on money management and tips and tricks that can help improve your finances. This article may be reprinted on your Web site if the copyright, author information and active link are included.