Cash Advances for the Unemployed

dCash advances are usually no longer paid out as cash, but transferred to an account. In dealing with their customers, financial institutions refer to loans as cash advances, for the award of which no specific purpose has to be proven. More commentary at metroresearch.org

The internally used banking terminology designates credit lines that are granted as cash advances and that can be claimed by the borrower at any time, and thus in private customer traffic the credit line, a credit limit and the credit line on a credit card account. Those who are unemployed do not work for a maximum of fifteen hours per week and are at the same time available to the labor market. Most unemployed people receive, during the first year of their unemployment, the unemployment benefit I financed from their insurance contributions, the amount of which is based on previous earnings.

Cash advances in the sense of the banking language

Cash advances in the sense of the banking language

Cash advances are basically possible for the unemployed in the technical meaning. Both the limits of a credit card account and a withdrawal credit are checked by most banks only at the request of the customer. As long as the latter properly uses the granted credit line and adheres to the repayment agreement, the financial institution has no reason to reduce a granted credit line.

With a discretionary credit granted to the current account, some banks also only sporadically review the credit line, while other financial institutions regularly adjust the account credit line to receive cash. In this case, it is possible to save cash credits issued as out-of-pocket loans for unemployed persons through self-transfer between two accounts.

Transfers between two separate accounts to maintain a credit line are not permitted by law, while the same procedure is generally permitted to ensure adequate cash receipt for free account management.

Cash advances in the broader sense

Cash advances in the broader sense

In a broader sense, cash advances for the unemployed, that is, non-purpose loans, are difficult to obtain because of the low revenues. Employment agencies and job centers do not provide cash advances, but interest-free loans only with earmarking for eligible uses specifically identified by the legislator, such as urgently needed purchases or resumption of work. If relatives or friends give out cash loans to the unemployed, their cash payout makes sense.

In the case of a transfer, recipients of unemployment benefit II have to prove that it is a non-chargeable loan and not a gift. For this proof, no interest payment, but a repayment of the loan must be contractually agreed.

Loans borrowed through private-sector lending platforms can be considered as cash advances for the unemployed, as compliance with the stated purpose is usually not controlled. However, in contrast to cash loans in the strict sense, the borrower has to indicate the planned use of money, since this is the decision criterion for lending to most private lenders.

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