With so many paycheck advance apps vying for your business, it's difficult to understand who truly has your best interest in mind.
We all struggle with making ends meet, especially in our current economy, when most businesses are on the brink of bankruptcy. Getting paid every other week can put a strain on our finances, especially when bills are due at the beginning of the month.
Changing How Often We Are Paid – With Paycheck Advance Apps
It would be much easier to budget our money if we were paid on a weekly basis. However, According to the U.S. Bureau of Labor Statistics, only a small percentage of Americans are paid weekly. In reality, only 30% of workers receive a paycheck each week. The rest of us must wait every two weeks, and in some cases – monthly!
There is where paycheck advance apps make all of their money. They realize you may need access to the money you have already earned before payday. Unfortunately, the traditional payday model promises to help you ruin your finances rather than get them back on track.
Especially with some regulated states allowing annual percentage rates to reach 35.99%, it's an incredibly unethical business model that pushes people living paycheck to paycheck even further into debt. For the states that do not regulate payday loan companies, the average annual percentage rate is 391%!
Luckily, fintech continues to break the mold of these archaic traditional paycheck advance companies and offer reasonable and affordable solutions to the delayed employer payroll systems.
By removing the brick and mortar stores, payday advance apps are able to supply customers with much-needed cash without charging extremely high interest and unnecessary fees.
Payday Advance Apps – An Overview
Fintech has a new way of getting you your hard-earned money when you need it most. In a best-case scenario, you can wait until your next paycheck and can cover the bills until then. However, if you have a financial emergency that requires immediate funds you don't have, a payday advance can be a great option to keep you from charging additional debt on a credit card.
Think of a payday advance as a way to get you the money you have already earned – faster. It's not a loan in the traditional sense that you pay interest depending on how long it takes you to pay it back. Payday advance companies only allow you to get an advance on about half of your guaranteed paycheck to keep you from overspending.
If your check is going to be $1,000 and you need $500 for a car repair, the payday advance app will give you the $500 when you need it most. When the time comes for your paycheck to hit your account, the payday advance company will take back the $500 you took from them, and deliver the remaining $500 into your account.
You do not pay interest on the money you receive ahead of time-no more paying an additional 34% on your own money and additional fees to a payday loan company! However, we all know there is no such thing as free money, so we will discuss how fintech makes their money.
How Payday Advance Apps Can Help – And Hurt Your Finances
Keep in mind, the best way to manage your money is to have an emergency fund to cover unexpected financial crises. By combining a monthly budget with properly funded emergency savings, you should seldom, if ever, need a payday advance.
However, if you are just starting on your financial independence and debt-free journey, sometimes we all need a little help to get back on our feet. This is where being provided your hard-earned money a few days early can help you succeed. Rather than taking out a loan and paying interest, these payday advance apps can offer you the support you need.
The Payday Advance Downward Spiral
On the flip side, if you do not have a plan to manage your money and get out of debt, payday advances can quickly push you into a worse financial state. If you borrow from your future paycheck, you must ensure you can live off less than you are accustomed to for the remainder of the month.
Often people use these advances to pay for things that are not truly emergencies. This results in frivolous spending that requires more and more cash advance and eventual personal loans and increasing debt.
Best Performing Payday Advance Apps
We have scoured the internet and app stores to find the best performing payday advance apps that actually do what they promise – to get the money you have already earned into your pocket when you need it most.
By speaking with several CEOs of these companies, it was clear some of them outperform the others. Some are just starting out, while others have been established for a while.
What we found surprising is that some of the newer companies actually outperform the veteran apps. We credit this to learning from experience and seeing where other platforms are lacking.
Some of the newer companies will not only give you access to much-needed cash, but they can also help you with online banking, investing, and cashback options. They tread into the world of online banking with a new twist geared to customer service and helping people where they need it most.
Rain is turning a corner on the way employers and employees work together. Rather than focusing on the employee, Rain first creates a relationship with the employer to integrate with their payroll platform. By integrating with Rain, employees have immediate access to the funds they have already worked for.
Ran works hand in hand with employers and charges no fees for the employers to utilize their integration.
Rain fills in the gap between employers and employees. With the Rain app, employees can access their money before payday for a small fee, comparable to an ATM fee. If employees can wait until payday, they receive their normal paycheck like they always do. Having the option to get a payday advance is a great way to reduce employee stress.
By helping employers get money into their employees' hands faster, not only are the employees more in control of their finances, but it can positively increase employer-employee relationships.
Rain has an impressive road map and some great updates on the way. Rain will soon include a checking account option so your paycheck is directly deposited into your Rain account each pay cycle.
With this option, you still have the ability to access your money before payday, but you would not need to transfer the money to an external account. Using Rain as a “one-stop-shop” has its benefits, especially for employees who do not currently have a checking account.
Chime is similar to Rain in that it integrates with the employer to facilitate a faster payment option to the employee. Rather than owing another company money, Chime can move the funds from your employer to your account immediately when you are paid.
Chime keeps you from staring at your account with a “pending” label on your incoming funds. You are given access to your money immediately, which can be a day or two before your actual payday.
Chime has moved further into the online banking world and offers a multitude of additional financial options. They offer the ability to transfer money to other accounts, deposit checks with their mobile app, and pay bills directly from the Chime account.
With online banking comes additional bells and whistles. Chime really does chime by providing you banking alerts when you receive money or spend money.
Coming in at number three is Earnin. Earning has a long, rich history in the payroll advance world because they were previously known as ActiveHours. Earnin has changed hands and improved upon previous business models to rank number three on our list.
We like Earnin because the app understands the dangers of payday advances and the slippery slope associated with them. Rather than setting you up for failure, Earnin only allows you to take a payday advance at a maximum of $100 per day. While this can be frustrating for some, it may actually be a blessing in disguise for others.
Another big plus to Earnin is there are no fees. It relies heavily upon the honor system in the form of tips. If you're happy with the service, you may “tip” the app to keep it up and running.
Balance Shield is one of Earnin's proprietary services, which helps users avoid overdraft fees. By connecting to your bank account, Earnin monitors your account usage and will automatically provide a paycheck advance to your account if the account falls below $100.
Cash back rewards are one of the more exciting features of Earnin. If customers use the app to pay for purchases, users can earn cash back rewards of up to 10% depending on what they buy.
Varo is another payday advance app that is geared towards the employee. If you integrate Varo with your bank account, your paycheck is instantly added to your account as soon as your employer releases it (which is often as early as Wednesday).
Varo is attempting to enter the credit and online bank scene by providing a debit card to users that can link to:
- Apple Pay
- Google Pay
- Cash App
Included with the debit card is the ability to access cash from the large Allpoint ATM network. You have probably heard of Allpoint because they have an ATM network of over 55,000 ATMs.
4. Axos Bank Direct Deposit Express
Axos Bank is an online bank that allows direct deposits directly from your employer. Rather than holding your money hostage, Axos will enable you to access your cash as soon as the deposit is made.
By using Axos Bank, you can rest assured you can access cash from any ATM without worrying about fees. Unique to Axos Bank is its unlimited coverage of ATM fees in the United States.
Similar to the other apps, Axos Bank allows you to deposit checks through their mobile app by taking a picture of the check.
We first learned about Dave from Fincon 2019. Dave is one of the newer apps in the market that has learned to improve on the best aspects of payday advance while scrapping the worst aspects. The Dave app actually works as an online checking account, which offers payday advances when you need them most.
By integrating with your bank account, Dave provides timely notifications if you are nearing a zero balance. The goal is to help you avoid overdraft fees that put you further in debt. In addition to the notification, Dave also offers you a $100 deposit to avoid the fees.
Brigit is another payday advance application that provides you your money faster than a traditional paycheck. Unlike other popular apps, Brigit allows you to access an immediate $250 with no questions asked.
Similar to that of other popular apps, Brigit takes its cut off the top before your paycheck is deposited into your account. One nice option is the ability to pay Brigit back before the arrival of your paycheck. In the event you don't need the money borrowed or come into a nice cash flow, you can return the money.
Brigit falls a little further down on our list because some of their featured options are going to cost you. If you want to set up an automatic payment in the event, you are in danger of an overdraft; they offer this service. Unfortunately, unlike competitor applications, Brigit will charge you $10 each month you want to utilize this protection.
Brigit has an option to notify you if your account balance is running low, so you can request an advance if you need it. You can also set up automated advances to receive a transfer anytime your account balance is in danger of dropping below zero to avoid bank overdraft fees. However, this perk comes with a $10 monthly fee.
MoneyLion is one of the more well-known payday advance apps on the market. Similar to Brigit, you can access up to $250 before your next paycheck.
MoneyLion continues to slip down the rankings because they continually increase their prices to access advanced features. MoneyLion does have a free option, but the benefits are limited. With the free membership you receive:
- Zero Fee Checking
- Zero Fee Managed Investing
- Free Credit Monitoring
- Free Fraud Protection
- Cash Back Rewards
The paid option of the app is called the MoneyLion Plus membership. You receive all the features mentioned above, plus an additional benefit of a low-interest credit builder loan.
These credit builder loans are set up, so you are protected from going further into debt because you only borrow the money you can pay back. You can borrow up to $500 with instant approval and pay it back over a set period. Also, the 5.99% APR isn't very high considering the payday loan company rival rates.
Flexwage utilizes the more familiar debit card option as a way to access your money. The debit card essentially replaces the traditional paycheck and allows you to add or take money from the account. With the debit card option, you no longer need to withdraw cash from a machine to make purchases. The FlexWage debit card makes accessing your money much more convenient.
My favorite option about FlexWage is the FlexPay option. I was a server in a restaurant for many years, and I would have a stack of cash at the end of the night. Tips were paid in cash, and it was often difficult to manage that type of income without it burning a hole in my pocket.
FlexPay allows your employer to upload your tips onto your debit card rather than sending you home with a stack of cash.
Similar to the Rain app, as previously mentioned, PayActiv directly integrates with your employer and is offered as an employer benefit. Similarly, PayActiv makes your money available to you much sooner than the traditional payday.
In addition, if you need a payday advance, you can access up to 50% of your earned wages as long as they do not exceed $500. However, PayActiv will charge you a flat fee for each transaction. This fee is agreed upon by your employer and PayActiv, so it's out of your control.
Recently, Walmart partnered with PayActiv and offers this program to its associates. If that doesn't show you the app reliability, I don't know what will.
In sticking with the employer offered benefits theme, Branch comes in at #10. Employers must agree to use Branch with their payroll software to provide this service for each employee. However, Branch offers a few additional features that PayActiv does not.
Branch assists employers by tracking employee schedules and coordinating the personnel strategies by giving managers the most up to date information. With this type of information at their fingertips, managers can make more informed decisions when deciding if they need to call in additional employees or hire extra staff.
DailyPay rounds out our more traditional payday advance apps to help employees make it until payday. DailyPay is set up to track how many hours you have worked and credits you for this time, depending on your hourly wage.
12. Rainy Day Lending
Even though Rainy Day Lending has “lending” in its name, it isn't necessarily a traditional lender.
The Rainy Day Lending app provides users cash loans in the form of a small personal loan. Investors are matched up with people who need quick cash, and the interest rates vary upon credit scores and amount loaned.
13. Loan Solo
LoanSolo operates with a similar structure to Rainy Day Lending because it connects investors with borrowers. In order to avoid a downward debt spiral, LoanSolo only offers up to $1,000 for a payday cash advance on up to $3,000 for personal loans.
Again, the amount of interest you will pay for this cash varies by your credit score and the amount borrowed.
PockBox functions like our two previous apps. By connecting potential borrowers with short term investors, people in need of money before payday can take advantage of this app.
Again, a limit is placed on borrowers, and you are only allowed to receive up to $2,500 immediately.
Similar to Dave and Earnin, the Even app connects employees with their paychecks days in advance.
Even users can access up to 50% of their earned money with the increased ability to manage their bills and budget with the Even app.
Tapcheck relies heavily on employer cooperation and integration to supply employees with their money quickly.
With Tapcheck, an employee can make a request through the app to receive their earned money ahead of time, which will be repaid out of their next paycheck.
Zirtue, which sounds eerily similar to virtue, allows potential borrowers to set the terms of their own loans. If you're in need of some quick cash before payday, you can set your terms such as loan amount, time to repay, and any interest rate – if applicable.
Once you decide upon your terms, you can send this contract over to a friend or family member who may be interested in helping you out.
If the friend or family member agrees to help you at the terms you have offered, automatic payments are set up, so all the parties end up happy in the end.
Wrapping It All Up
Borrowing money in any form, even if it's from yourself, is a bad habit that can lead to financial ruin. Payday advance apps and services should only be used as a last resort – and only if you have a plan to get out of your financial mess.
Avoid treading water and make a plan and budget to get out of debt and start making real progress on your financial decision. The days of barely getting by should be over and done with. Make the choice today to get out of debt and start building wealth.
Michael launched Wealth of Geeks to make personal finance fun. He has worked in personal finance for over 20 years, helping families reduce taxes, increase their income, and save for retirement. Michael is passionate about personal finance, side hustles, and all things geeky.