For the millions of people with bad credit, simple actions such as obtaining credit cards or taking out bank loans become incredibly difficult. This huge market is now being served by lending companies that provide same day cash advances. As long as you can prove that you have a job and will have money in your bank account at the next payday, the lending service will lend you money (typically about a few hundred dollars).
You write the lending service a check for the borrowed amount plus a service charge, which the lender cashes at the next payday. To borrow $100, a typical service charge would be around $15. These lending services have become hugely popular and profitable, reflecting that there are many people without the means to borrow money on credit. The reasons for taking out cash advances are many: Some need extra cash to cover a car accident or to go on vacation.
Even the media have reported on the staggering growth of payday loan providers. For example, Portland, Oregon has seen an explosion in payday loan shops. Throughout the Portland area, there are now more payday loan offices than Starbucks and 7-Elevens combined. Cash advance companies can also be found online and will distribute checks electronically.
In Missouri, the story is much the same. The Missouri Division of Finance reported that during a one-year period, state residents took out 2.6 million payday loans, an incredible number. This shows that there are millions of people who have turned to these cash advance services to help make the day-to-day money crunch a little easier.