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How pay advance apps work
You could get the money you need today — without having to wait until your next paycheck.
Although still new, pay advance apps are cornering the market on more affordable short-term loan alternatives. You can get the money you’ve already made when you need it, and often at a much lower cost than payday loans. But most apps have strict eligibility criteria you’ll have to meet first.
What do you want to do first?
What is a pay advance app?
Provided you’re currently employed and work steady hours, a pay advance app — also known as a cash advance app or paycheck advance app — may be able to advance you up to 50% of your paycheck. The time it takes varies by provider, though most can deposit your funds into your bank account in less than three business days. Most pay advance apps work off tipping or a small monthly membership fee, so you can stay worry-free from interest or other costs.
How do pay advance apps work?
In general, pay advance apps work by downloading the app to your smartphone and following the directions to create an account. You typically need to enter your contact details, bank account numbers and information about your employment and when you’re paid.
From there, it may take a few days for the app to confirm your identity and direct deposits. Once it does, you can navigate to its pay advance section and select and how much you’d like to borrow and submit your request.
How much can I borrow?
It varies by provider, you can typically borrow a percentage of the money you’ve already earned. Some have a small maximum limit of just $75, while others may advance you up to $500 per pay period.
The total depends on the app and your hourly wage. Many are constantly doing the math for you and show you how much you have available at any given time so you can make an informed decision.
How much does it cost to borrow?
It depends on the app. Some charge a monthly membership fee that can range from $1 to $10, while others ask you to tip — though it’s usually optional. And none of the apps listed below charge interest — a far cry from the costs of payday lenders.
How do repayments work?
Usually, the pay advance app automatically deducts your funds from your bank account on the due date — which is typically your pay day. If you don’t have enough in your account, many will hold off on withdrawing your payment to prevent you from overdrafting.
However, you won’t be able to borrow again until you repay your current advance. And some apps like Dave may ban you if this happens too frequently.
Employer-based pay advance apps
Some companies like Walmart and Comcast have started partnering with pay advance apps to offer both wage advances and installment loans specifically to employees. These work similarly to pay advance apps for everyone, but instead it’s your employer that advances you money and deducts repayments from your future paychecks. You can learn more with our guide to employer-based paycheck advances.
Compare pay advance apps
Pros and cons of pay advance apps
- Limited costs. Pay advance apps usually charge zero interest, so you’re only on the hook for a small monthly membership fee or optional tip — if that.
- Quick turnaround. You may be able to get your money the same day depending on the app you use.
- Budgeting features. Almost every pay advance app tracks your income and spending to give you a heads up if you might overdraw your account.
- Must be employed. Pay advance apps give you an advance on your paycheck, so you need to be employed to qualify.
- Limited loan amount. The amount you can borrow is typically based on the money you’ve already earned — usually no more than $500 per pay period.
- May pay a membership fee. Some apps charge a monthly membership fee — whether or not you take out an advance.
Am I eligible to use a pay advance app?
Eligibility criteria vary between providers, but there are a few basic requirements you need to meet:
- Be gainfully employed
- Work regular hours
- Receive a consistent paycheck
- Have an operational checking account
- Receive direct deposits
Some apps may also require you to work for a specific employer or make a minimum amount of money each month to qualify.
Will pay advance apps affect my credit?
In general, no. Most pay advance apps don’t check your credit history when you request an advance, nor will they report your on-time or missed payments to the major credit bureaus.
Alternatives to pay advance apps
Pay advance apps are only one option when you’re looking for cash fast. If you need to borrow more than these apps offer, you might want to look into these alternatives:
- Payday loans. Depending on what state you live in, you may be able to get a payday loan between $100 and $500. However, these usually come with APRs in the triple digits and loan terms of just a month.
- Installment loans. Looking for larger loan amounts or longer terms? Installment loans have more flexibility than payday loans, but often come with the same sky-high APRs.
- Payday alternative loans. Some federal credit unions offer payday alternative loans, which are short-term loans up to $1,000. Rates are capped at 28% APR, though you’ll have to be a member of the credit union to qualify.
- Auto title loans. Own your car? Auto title loans use your vehicle’s title as collateral, which means they’re often cheaper than payday loans. However, you risk losing your car to repossession if you default.
- Local programs and resources. Many local government agencies, nonprofits and charities offer free financial services and help with things like food or utilities for those in need. Check out our guide to local resources by state to find one near you.
Compare short-term loans
If you need a $100 or so to hold you over until your next paycheck, consider using a pay advance app. They usually don’t charge interest, so you’ll only be on the hook for a minimal membership fee or optional tip — if that. But you’ll need to be employed to qualify, and you’re limited to borrowing a percentage of the money you already earned.
Don’t have a regular source of income or need to borrow more? You might want to look into your payday loan options instead.
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