The TV commercials make payday advance apps sound so helpful: Are you short on cash? Just get your paycheck a couple of days early.
You also can’t blame anyone for being interested in the idea of getting a paycheck a couple days earlier. With inflation on the rise, it’s easier than ever to find yourself short on cash. Still, you should look at even helpful payday apps warily for a few reasons:
— Payday apps are not all alike, for starters. Some of them will only give you part of your paycheck, while some actually give you your entire paycheck early. You’ll want to know that distinction before signing up.
— Some payday apps charge fees and others ask for tips. Either way, it is a short-term loan, and you are paying money to get your money.
— Getting your paycheck early sounds great. But if this becomes routine and the novelty wears off, then what? You’ve simply moved your paycheck date to one or two days earlier in the week. You still have the same amount of time between paychecks.
[Read: How to Budget for Rising Gas Prices]
What Are Payday Advance Apps?
The idea behind payday advance apps is that they advance your paycheck, or part of your paycheck, usually for a low fee.
That’s what some of them do, but they’re all different, and some may be less appealing as you comparison shop and weigh their differences. But they shouldn’t all be painted with one brushstroke as predatory companies, according to Ryan Cicchelli, founder of Generations Insurance & Financial Services, a financial planning services company in Cadillac, Michigan.
“These apps are, by and large, an extremely far cry from the much nastier practices seen in strip-mall lending shops,” Cicchelli says.
That isn’t to say Cicchelli thinks people should drop everything to download a payday advance app. “Let us not forget that any kind of payday advance can create a slippery slope that puts people in greater danger down the line,” he says. “People should use these services only after carefully weighing the pros and cons of doing so. But for folks who just need a few dollars to get them through the week, these services can be a lifeline. Plus, they are most likely cheaper than adding anything to a credit card balance.”
We’ll get deeper into the pros and cons of payday advance apps, but to learn more about these apps and how they differ, the big names include:
— Chime.
— Varo.
— MoneyLion.
— Empower.
— Go2Bank.
— SoFi Checking and Savings.
— Earnin.
— Brigit.
— Dave.
— Albert.
Chime
If you have a Chime online bank account and your employer offers direct deposit, your check will become available the moment your bank gets the money. Typically, many banks will hold checks for 48 hours before they become available to the consumer; Chime simply manages to get the money to you faster. Its TV commercials tout the payday advance element, but it’s really an online bank account with a payday advance feature.
Varo
This is also an online bank account with a couple of payday advance features. Like Chime, Varo can get your paycheck to you the moment it hits the bank account, which is generally 48 hours sooner than conventional banks. And if you need your money sooner, Varo will give you an advance of $20 for free. But if you need more than that, you’ll start to pay. The most of your paycheck that you can have advanced is $100, and the most you’ll pay for that is $5, which you’ll have to repay within 15 to 30 days.
MoneyLion
You can sign up for the Instacash feature, which will give you a cash advance up to $250, or you can sign up for RoarMoney, which allows you a $1,000 cash advance. If you opt for the latter, your direct deposits will go directly into a RoarMoney account. You’ll also get everything you’d expect from a financial institution, like access to ATM networks and a debit card.
And you may not necessarily be able to get a $1,000 cash advance. It may be less. It depends on factors such as how much money you typically have direct deposited into your RoarMoney account.
There is a $1 monthly fee to have a RoarMoney account, and if you want instant delivery of your cash, you’ll pay $3.99 ($4.99 if you are a user but don’t have a MoneyLion checking account). Otherwise, if you can wait (But then what’s the point of a payday advance?), it generally takes 12 to 48 hours for the payday cash advance to land in your account if you’re a MoneyLion checking account user and three to five business days if you are not.
Empower
Empower gives you a cash advance of up to $250, which you’ll repay automatically when you get paid. As the website promises, there is “no interest, no late fees, no risk to your credit.”
But there is an $8 monthly subscription fee, and you’ll want to ponder whether the service is worth it. That said, the website says, “The $8 fee is for the banking and budgeting tools and does not have an association with advancing.” In other words, you’re paying a monthly fee for Empower’s features, including savings, budgeting and expense-tracking tools.
Go2bank
If you have direct deposits going to your Go2bank account, you can get your entire paycheck early for free. How early? Up to two days; you may get government benefits up to four days early. If you don’t have direct deposits going into your Go2bank account, you’ll pay $5 a month.
SoFi Checking and Savings
Like many payday advance apps on this list — really, a lot of these are more like online banks that offer the payday advance feature — you’ll want to set up direct deposit with SoFi. If you do, you can get your paycheck up to two days earlier than you otherwise would.
[Read: Best Budget Apps.]
Earnin
This payday advance app will send you up to $100 a day and up to $500 of your paycheck. You have to provide your checking account information and prove that you have a paycheck; freelancers may struggle to prove that in Earnin’s eyes. But it will give you this money for free and with no interest. You’re just asked to pay a tip; it suggests 4%.
Brigit
There’s a $9.99 monthly membership fee that may give you pause, but if you’re fine with that, this payday advance app will send you up to $250 that you’ve already earned within one minute. You have to show proof of your monthly income and also that you’ve had your bank account for a while (it has to be at least 60 days old, which is common among these apps).
Once Brigit is positive that you are on the up and up, and that you really will be getting a paycheck, you can get an advance on up to $250. Once you get paid, an automatic withdrawal of what you owe Brigit will go back to the payday advance app.
Beyond the payday advance, Brigit has other features, such as budget tracking tools and automatic cash advances that can kick in any time your balance is about to drop below zero. To avoid a $30-something overdraft fee, you may feel that the $9.99 a month is worth it.
There is a free version of Brigit for those who want to try it out, but it doesn’t include access to the payday advance component of the app.
Dave
With Dave, you can receive up to $100 in an advance, although there is a way to get $200 (it involves getting a Dave debit card and a Dave spending account). You won’t be charged interest, but you will be asked for a tip of up to 20%. You will also pay a monthly membership fee of $1 to use the app. It’s worth noting that if you need the money fast, like within eight hours, you’ll pay a fee between $1.99 and $5.99. But if you can wait a couple of days, there’s no fee.
Dave will help you manage your money. For instance, if your account balance is low, or you don’t have enough money to pay a bill that Dave knows will be due soon, you’ll get a notification.
Albert
Albert will give you up to $250 from your next paycheck. There’s no interest, fees or credit check. You just pay that $250 back when you get your next paycheck. If you want that money immediately (in 10 minutes or less), you will end up paying a small fee if you subscribe to Albert Genius, a service where you’re able to ask Albert’s financial experts questions about money.
[SEE: Things to Do When You’re Deep in Debt.]
The Pros and Cons of Payday Advance Apps
The pluses of payday advance apps are clear: If you use one, you can either get your entire paycheck a little sooner than you would be able to at other banks (at least, that’s the pitch), or you can get a small payday loan, generally between $100 to $250, for a relatively small fee and no interest. Compare that to payday loan stores and online lending stores, which can both really soak consumers with their high-interest loans.
A negative of payday advance apps is that some of them can still end up hurting your finances. If you are constantly short on cash and frequently use payday advance apps, you could find yourself in a cycle where every month you’re constantly shelling out money to get your own money a little early. The cycle may not be as bad as with a payday lending store, but it can still be a cycle of debt and cash-flow shortfalls nonetheless.
Justin Nabity, certified financial planner and founder and CEO for Physicians Thrive, a financial advisory firm for doctors headquartered in Omaha, Nebraska, thinks payday advance apps can be useful in a financial emergency.
“These apps enable you to get cash in advance that can easily cover small expenses and save you from high-interest loans from the bank,” Nabity says.
But he wouldn’t recommend getting in the habit of using payday advance apps. “It is not a long-term solution, and using these apps on a regular basis can lead to unhealthy financial habits,” Nabity says.
After all, anyone with a checking account and a regular paycheck should always have at least one goal: to reach the next paycheck period with extra money in the bank. If you are always getting cash advances, you aren’t doing that.
The bottom line: If you’re going to use payday advance apps and you want to get ahead financially, use them strategically.
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10 Payday Advance Apps originally appeared on usnews.com
Update 04/20/22: This story was published at an earlier date and has been updated with new information.
