The short-term borrowing cycle occurs when a borrower uses a new cash advance to pay off a preceding one, incurring repeated finance charges without reducing the underlying principal.
Strategy 1: Request an Extended Payment Plan (EPP)
Many state lending laws and Community Financial Services Association of America (CFSA) guidelines mandate that licensed lenders offer an Extended Payment Plan (EPP) allowing borrowers to repay the principal in 4 equal installments over 60 to 90 days with zero additional fees or interest.
Strategy 2: Credit Union Payday Alternative Loans (PALs)
Federal credit unions offer Payday Alternative Loans (PALs I and PALs II) with capped interest rates (maximum 28% APR), application fees capped at $20, and terms from 1 to 12 months.