Given that 78% of U.S. workers are living paycheck to paycheck, it’s hardly surprising that people find themselves short on cash sometimes.
And plenty of payday lenders have popped up to “help” those in need of fast cash — nearly 18,000 of them in the U.S., in fact.
To put that number in perspective, there are just 14,000 McDonald’s stores across the country.
Yes, it’s true… there are more locations pumping out payday loans than Big Macs.
Those lenders fill a real need, but with average interest rates between 391% and 521%, their practices can only be described as predatory.
What’s even worse is that payday loans often solve an immediate problem while making the borrower’s overall financial situation exponentially more dire.
That’s because often, when the loan comes due (typically in two weeks), the borrower can’t repay it. When that happens, the loan rolls over and the interest rates goes up even further. This happens 80% of the time.
Thankfully, these lenders are no longer the only game in town. Advances in financial technology, and increasing pressure on financial services providers to offer transparent and fair products to consumers, has led to the development of a number of new options that can help you when you need cash in a hurry — without driving your financial future over a cliff.
In this article, we’ll highlight some of the best cash advance apps on the market today. While these apps are superior alternatives to payday lenders, they don’t solve the root of the problem: the fact that you need a quick infusion of cash in the first place.
Later in this article, we’ll offer some tips for breaking the paycheck to paycheck cycle once and for all.
What Is a Cash Advance App?
According to the U.S. Bureau of Labor Statistics, only about 30% of workers get paid weekly. The other 70% are paid either bi-weekly, monthly or even semi-monthly. If you’re part of the 70%, that means you have to wait for a long period of time before you can access the money you’ve already made.
That can be a serious problem for people who earn relatively low wages, or for those who have to face a sudden, unexpected expense.
While everyone knows that they should have an emergency fund in place for just that kind of scenario, the reality is that many people don’t. And that’s especially true for those who are living paycheck to paycheck, because it’s hard to set money aside when you’re struggling to pay your bills and keep food on your table.
A cash advance app offers early access to the money you’ve already earned. It’s a similar concept to payday loans, with one very important difference: these apps don’t charge triple-digit interest rates and exorbitant fees. Usually, they’re free or cost next to nothing.
When Should You Use a Cash Advance App?
Using a cash advance app can be a good option if you need money immediately, but before deciding, you should know when taking a cash advance is appropriate and when it’s not.
A cash advance app might be a good option if:
- You need to cover emergency expenses like a car repair or a medical procedure. Foregoing these things can often lead to missed work, turning your short-term financial emergency into a sprawling ordeal that derails your finances for years.
- You can use it to avoid a substantial late fee. If a cash advance app allows you to pay your bills on time and avoid late fees or an account overdraft, it’s a great solution.
- To stop a check from bouncing. Banks typically charge around $25 to $35 for a bounced check, and the recipient of the check can also charge you another $20 to $40 (or a percentage of the amount the check was written for).
But you should NOT use a cash advance in these cases:
- To purchase a “want.” Cash advances should be limited to bills and expenses, not shopping.
- To pay a bill that has a grace period. If you’re going to be late paying a bill, call and ask if there’s a grace period. You may not face a late fee if it’s paid within a few days after the official due date.
- When you’re not willing to fix the root of the problem. A cash advance app is a short-term solution. Long-term, your goal is to get into a financial position where such an app isn’t necessary. Or better said, to fix the root cause. That means building up an emergency fund, paying down your debts, and growing the gap between your income and expenses.
Best Cash Advance Apps
There are a number of cash advance apps on the market. All have their own unique set of features and benefits. Out of the ones we reviewed, the four below are worth considering.
Keep in mind that the best cash advance app will vary depending on your particular needs, so take note of the pros and cons of each.
Best for: Those with an hourly job with pay periods extending beyond one week.
The Earnin app lets you access your pay soon after you’ve worked your hours. Just give the app information about your workplace and link your bank account, and Earnin will track your hours so that you can access your earnings quickly.
Cash advance limit: $100 to start, and then up to $500 after use.
Requirements for advance: Users must be paid via direct deposit at a supported bank, and they must be employed at a physical location or use an electronic time tracking system.
Cost of advance: There is no cost. The app operates on a tipping system. Users can tip what they think the service is worth if they wish, but there’s no obligation to do so.
Payback terms: Once your paycheck is direct deposited, Earnin will deduct the amount you were advanced.
Non-payment: One unique aspect of Earnin is the absence of non-payment penalties. If you don’t have enough money in your account when the company tries to recover the amount you borrowed, your Earnin account will be placed on hold and you wont be eligible for any further advances. However, you won’t be assessed any late fees and they won’t send your account to collections.
Pros: No cash advance fee.
Cons: The $100 limit is low.
Best for: Employees paid by direct deposit in need of a small no-interest loan.
Dave offers cash advances as well as no-fee checking accounts, and an app that helps users manage their bills by analyzing their spending and alerting you about bill due dates (which can help you avoid late fees).
Cash advance limit: $75.
Requirements for advance: Must have a bank account, or open one with Dave, and be paid via direct deposit.
Cost of advance: $1 per month for the app.
Payback terms: The advance amount will be paid back on the next payday. Members will have the advance debited from either their Dave account balance or their linked checking account.
Non-payment: When your payback is due, Dave will check your bank account to make sure you have enough funds to cover the amount. This helps avoid overdrafts. If can’t cover your advance, Dave will continue sweeping your account over the coming days, taking partial payments. There are no late fees or penalties, but failure to pay back your advance will get you banned from the app.
Pros: The $1 per month fee is reasonable, and the app can help manage bills.
Cons: The cash advance amounts are small.
Best for: Those paid a salary via direct deposit in need of a loan up to $500.
The MoneyLion app is more than just a cash advance option. It offers many other banking services, including no-fee checking accounts, loans and managed investing.
Cash advance limit: $250 for 0% APR “Instacash” advances, but members can take out a Credit Builder loan for up to $500 for an APR at a reasonable 5.99% rate.
Requirements for advance: Users must have a MoneyLion checking account and be paid via direct deposit. The service is only available after you’ve received two direct deposits into your account.
Cost of advance: Either 0% or 5.99%, as noted above.
Payback terms: Once your paycheck is direct deposited, MoneyLion will deduct the amount you were advanced.
Non-payment: If your account doesn’t have the funds necessary to cover your Instacash, MoneyLion will continue trying to sweep your account indefinitely — which may result in bank fees, such as overdraft fees.
Pros: Combines fee-free cash advances with other banking services.
Cons: In order to access the Credit Builder loans, users must sign up for a paid account, which costs $19.99 a month. This more than negates the low APR for a loan of that size.
Best for: Employees who constantly get hit with overdraft fees.
Brigit doesn’t wait around for you to realize you need a cash advance — it’s proactive. Connect your bank account to Brigit and an algorithm will predict if your bank account will run out of cash before your next payday. If it will, Brigit automatically deposits money into your account.
Cash advance limit: Up to $250.
Requirements for advance: A U.S.-based bank account and a “regular” job — in other words, a job that gives you a W-2 tax form.
Cost of advance: $9.99 per month for the app.
Payback terms: The advance is repaid once your next paycheck is direct deposited.
Non-payment: If you’re not able to pay back your advance on time, you can request an automatic extension directly within the app. Users have access to a limited number of extensions, however, and while Brigit makes it clear that there are no late fees or penalties, they don’t specifically say whether they resort to debt collection for seriously delinquent accounts.
Pros: Automatically avoid bounced checks and insufficient funds bank fees.
Cons: The monthly cost is pretty steep, and users can become dependent on the app to manage their checking accounts — something they should be doing themselves.
Employer-Sponsored Cash Advance Apps
While the cash advance apps listed above are open to anyone who meets the user requirements, the services below work directly with employers. They’re not necessarily cash advance apps as described in the previous section, but they work in a similar way by allowing employees to withdraw money they’ve earned as soon as they’ve earned it.
Some deposit cash into your checking account, and some issue debit cards that can be used for expenses.
These are best viewed as a benefit employers can extend to their employees. Money problems are stressful and can impact an employee’s performance.
In the case of something like a car repair that an employee can’t afford, they can also impact their ability to even get to work at all. As such, these services benefit both parties.
Branch gives interest-free advances on the money that employees have already earned. The maximum advance is $150 per day and $500 per pay period, and depends on the number of hours already worked. An instant advance is $3.99, and if you wait three days from making the request, there is no fee.
To use Branch, simply download the app and link it to your bank account and work schedule. If your employer doesn’t have a Branch account, you’ll be put on a waitlist. Your advance will be paid back on the next payday.
Some large, well-known companies offer Branch to their employees including Target, McDonald’s and Foot Locker.
DailyPay gives employees and contractors early access to the money they’ve earned but not yet received from an employer. For each day worked, you build up an available balance, which you can request at any time. The fee to request money is as low as $1.25 per request.
Users need a bank account, a prepaid debit card or payroll card, and may need to provide information from their W2. DailyPay works with companies including The Maids, Health Care Management Group and Shiftgig.
In order to use FlexWage to access your pay early, your employer must offer it as a benefit. Users don’t receive cash, but rather a reloadable debit card that the money can be loaded onto. It’s up to your employer how often you can make early withdrawals, as well as how much you can withdraw.
The money advanced is deducted from your next paycheck, and the small fee for using the service varies by employer.
FlexWage is offered by companies including Wendy’s, McDonald’s and Panda Express.
Employers must sign up for PayActiv in order for employees to use it. Once your employer has joined, you can create an account that will allow you to access your pay early.
Users can withdraw up to $500 or 50% of their earned wages, whichever is greater. The fees are $0 to $5 per withdrawal, based on your employer. The money is electronically transferred, can be withdrawn from participating ATM networks, or can be loaded onto a prepaid debit card.
The advance is deducted from your next paycheck.
Tips to Stop Living Paycheck to Paycheck
While the concept of stopping the paycheck to paycheck cycle deserves a post of its own, the most important things you can do today are:
- Get on a strict budget. If you’re consistently running out of money at the end of the month, Priority #1 is getting on a strict budget. That means strict limits as to what you can spend in each budget category. If you’ve failed in the past with budgeting, try out the cash envelope system.
- Focus on ruthlessly cutting your (big) expenses. Clipping coupons is fine, but if you really want to save money, you need to focus on bigger expenses where you can find some substantial savings. Trim and Truebill are two apps that can help make finding and eliminating expenses easy. These apps will cancel subscription services that you aren’t using or can’t afford, and can help negotiate lower rates on some of your bills.
- Consolidate your debt to save money. If your credit score is good enough, you may be able to qualify for a personal loan to consolidate debt. If you can get a loan at a lower interest rate than the rate of your debt, this can help you save a lot of money.
- Learn how to make more money. At some point, you’ll have cut all of the expenses you can and, in order to stop living paycheck to paycheck, you’ll need to increase your income. The best place to start is with your primary source of income — i.e., your regular job. You can ask for (and justify why you deserve) a raise, take on additional hours, or look for a higher paying position either within your current company or with a new one.
Other Ways to Get Extra Cash When You Need Money Now
Sell Unused Items
There are so many places you can sell a wide variety of items for extra cash including eBay, Craigslist, Nextdoor and Facebook. A good question to ask is whether you’d buy your stuff for the price you can sell it for today. If the answer is “no,” list it to sell.
Request a Payroll Advance Directly From Your Employer
Some companies will give employees a payroll advance without the need to use one of the services listed above. Ask your Human Resources department if they offer advances.
Get a Personal Loan
Companies like Credible offer personal loans at rates that are often well below other available options, depending on your credit score.
Personal loans are much cheaper than short-term payday loans, and you’ll have much longer to pay them back — which can help make sure you don’t end up in the dreaded “roll it over” cycle.
And Credible allows you to handle the entire process from application to loan approval online, which means you’ll have the money often within just a few business days.
If you don’t use Credible, understand that many loan companies offer rates that look great on the surface but can be just as bad as payday lenders when you zoom in on the details.
Plus, you need to be sure that the “lender” you choose is in fact offering a standard personal loan, as some are just sites that look like personal loan providers but direct users to short-term loan offers with sky-high interest rates.
For example, here’s a disclosure directly pulled from one such site:
“The APR [Annual Percentage Rate] on a short term loan can range from 200% to 2,290% depending on the loan amount, the duration of the loan, loan fees incurred, late payment fees, non-payment fees, loan renewal actions, and other factors.”
Start a Side Hustle
It can take some time to get a side hustle up and running, and some of them don’t have an option to cash out quickly. If time is not of the essence, side hustles can bring in some much-needed cash within a couple of weeks.
If you need quick cash though, choose a side hustle that will put money in your pocket faster. Depending on the volume of applications, Postmates couriers can be approved in as little as one day and have the option to cash out their earnings instantly.
Frequently Asked Questions
Here are answers to some of the questions people often ask about cash advance apps.
Under ordinary circumstances, it’s easy to spot the warning signs of a predatory lender and to stay away. But when you’re in dire straights, you might miss (or ignore) the red flags.
Plus, as new consumer-friendly options have come to market, so too have products from payday lenders that are disguised to mimic their less-predatory alternatives.
In short, the answer is: look at the fees.
We like Earnin because there’s no fee. And while the initial amount you can withdraw is a relatively low $100, the limit is eventually raised to $500. That said, all of the apps we’ve listed are safe and legitimate to use.
Earnin uses the same level of security, including 256-bit encryption, that most online banks use.
No, Earnin merely gives users access to the money that they’ve already earned but don’t yet have a paycheck for.
There’s no fee, but the company does accept tips. Users can tip whatever amount they wish, or not tip at all.
No. Since the money is not a loan, and apps like Earnin can debit the advance from a user’s account on payday, the risk for them is relatively low. As such, they don’t perform credit checks.
No. The money is not a loan so the companies don’t pull your credit score.
Dave can help you build credit by reporting your on-time rent payments to the major credit bureaus. Aside from that, the answer is no: there’s no credit check performed, and cash advances do not appear on your credit report.
Because of that, they won’t affect your credit (either positively or negatively). That’s true unless, for some reason, you’re not able to pay back the advance — in which case the amount due would be sent to collections. That collections account would then appear on your credit report.
Cash Advance Apps: Final Thoughts
Being in a position where you’re not sure how to put food on the table for your family or how to afford transportation to get to work is unquestionably stressful. And up until recently, one of the only options many people had was payday lending.
I’m glad to report that innovative companies like Earnin, Dave, MoneyLion, and Brigit offer those in need much more consumer-friendly payday loan alternatives.
The important thing to remember, however, is that these options are still only a temporary fix. Long-term, you’ll want to eliminate your high-interest debt (like credit card debt), build an emergency fund, and start earning more and saving for your future.