Are cash advance and loan apps safe to use?
There is still debate as to whether the COVID-19 stimulus checks are sufficient to support people during this difficult time. Congress is negotiating a third round of financial aid, and it could take several weeks before it reaches you.
Based on previous dunning checks, it takes about seven days to send after being approved. Tap or click here to see a COVID-related scam touring.
Since it will take some time before the relief checks are sent out, many people might turn to a cash advance application for immediate help. There are certain dangers associated with these types of applications to watch out for. Let’s take a look at some of the potential risks.
How loan applications work
A cash advance loan application allows you to deposit earned wages into your bank account before it is officially payday. It basically allows you to advance your salary.
At the end of the month, however, the amount advanced to you will be deducted from your salary. Some of the cash advance apps work with employers, while others work directly with consumers.
Some of the more popular cash advance apps are Earnin, Brigit, Current, and MoneyLion.
Dangers of cash advance loan applications
Your personal information should always be protected. But by using an early loan application, you might be transmitting sensitive information. Almost all apps will need your bank details, and some may ask for your social security number.
The Better Business Bureau also suggests, before signing up, to research it first and watch out for hidden fees and other pitfalls.
Here are some tips from the BBB to consider before using a cash advance or payday loan application:
- Understand how cash advance loan applications work: Some cash advance apps work on the basis of wages earned in partnership with employers, while others work directly with consumers. After calculating your current income, the apps give you a small loan. Your loan amount is then deducted from your next paycheck. Some apps require a monthly subscription fee. Others charge a fixed fee for loans or allow you to voluntarily “tip”.
- Get to know the lender: If you decide to use an app to get a cash advance, first search for the finance company on BBB.org. Make sure the company has a reputation for honest business practices. Additionally, ConsumerFinance.gov recommends knowing if the lender is licensed by your state, which means better protection.
- Read the conditions carefully: Take your time to carefully read the terms of the loan. Make sure you understand when the loan is due and how much you will need to pay if you don’t pay on time.
- Inquire About Fees: Beware of cash advance apps that claim to be completely free. This means that there are usually some hidden fees and costs. Fees may be disguised by other names, including âtipsâ, âdonationsâ, âmembership feesâ or âpremium account accessâ. Find out what you’ll pay, and know that seemingly low fees can add up over time.
- Be careful with your personal information: Most cash advance loan applications require access to your banking information in order to function. Make sure the company’s website and connections are secure and read their data privacy policies before sharing your information.
- Never pay an upfront fee: If a lender asks you to pay a fee before giving you money, don’t agree. Charging consumers with an undisclosed upfront fee is illegal and a sign of a scam.
These are some BBB suggestions for staying safe. There is more. You can see all of the Better Business Bureaus’ suggestions here.
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