How to Choose the Best Cash Advance App When You’re Out of Options

How to Choose the Best Cash Advance App When You’re Out of Options

If you’re one of the 56% of Americans who lives paycheck to paycheck, you might sometimes need to source some extra cash to tide you over until payday. Increasingly, people are turning to cash advance apps to cover their bills—typically you can get a few hundred bucks for a small fee, without worrying about an interest charge (unlike predatory payday loan shops). While useful in a pinch, these apps come with hidden costs that can also perpetuate a cycle of debt, and are therefore best used sparingly.

How do paycheck advance apps work?

Also known as “earned wage access” or “on-demand pay,” these apps let you access to wages you’ve already earned before payday. The advances are typically small amounts—usually up to $250—and there are no transaction fees or interest charges. The apps come in two categories: an employer-provided service integrated with your company’s payroll (like DailyPay, PayActiv, and Rain), or as a separate public app in which you plug in banking information on your own (some of the more popular ones include Earnin, Dave, Brigit, Chime, and MoneyLion—Money Under 30 has a good rundown of the best of them here).

There’s a bit of a legal loophole at play here: Since these apps don’t charge interest, and the money is technically yours already (because you’ve earned it and are just waiting for it to hit your bank account), it’s not considered a loan, allowing the cash advance companies to avoid the regulatory hurdles that you’d see with payday loans. Subsequently, they make money by charging subscription fees ($1-10 per month), or by requesting voluntary “tips” on an advance (up to 20% of the total)….Read more>>

 

Source:-lifehacker

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