Cash Advance apps can be a short term bridge for cash strapped people
Opinions expressed by Contractor the contributors are theirs.
You are reading Entrepreneur United States, an international Entrepreneur Media franchise.
About 78% of Americans ended up living paycheck to paycheck, according to a 2017 study by Career Builder. It may not be a coincidence that cash advance apps, which allow people to access their money before payday, have become a hot trend in recent years.
ijeab | Getty Images
These apps allow users to temporarily borrow the money they need to bridge the gap until the bill money arrives or arrives at payday, at a cost less than overdraft fees and overdraft fees. missed payment penalties from banks. In this regard, many start-up entrepreneurs and employees find these apps really useful.
For example, I recently heard about a startup team that is building a business that is paid on the performance of their work, so their accounts payable are in the back every month, and they depend on these apps to deliver them. money until their customers charge to reconcile. Learning more about this team and how they use treasury apps for creative finance gave me the inspiration to write the article and share more apps that can help more startups.
One downside to using cash advance apps is that they can potentially encourage bad financial habits. For example, some users may rely too often on early access to their money and end up with very little in the bank when the money arrives.
Here is a short list of apps that can be used to meet your cash flow needs.
What sets PockBox apart from many others is that users can borrow up to $ 2,500, which is up to 10 times the amount typically offered by cash advance apps. PockBox works as a connection with multiple lenders, which can increase the chances of getting approved. Users can apply even if they have bad credit, and if approved, they will usually receive their money the next business day. Interest rates vary depending on the lender.
Float is a new app that offers 24/7 bank account monitoring and sends a variety of alerts to help users more easily track their balance. Float also offers a large loan amount of up to $ 2,000 and is tied to multiple lenders, which can increase the chances of getting approved.
The Dave App is the first app of its kind, created to help Americans avoid ridiculous overdraft penalties. Dave allows users to borrow up to $ 75 at a time in exchange for a $ 1 per month subscription. No credit check is done. No interest is charged, but users are “kindly” encouraged to leave a tip. The loan is simply repaid on payday. The Dave app has some handy features like alerting the user when their bank balance is low and also helping them plan future spending.
With Earnin, it’s possible to get paid earlier (up to $ 100 per day) for hours already worked – and it’s completely free to use. Workers are encouraged to leave a tip if they can afford it, but it is not mandatory. The warning ? Users should regularly receive their salary by direct deposit to a checking account and also have an online timing system at work or at a fixed workplace.
MoneyLion Plus app
Users can download the MoneyLion app and sign up for the Plus service to access a $ 500 loan with a low 5.99% APR whenever they need it. The Plus service costs $ 19.99 per month, but these charges are waived as long as the user logs into the app every day.
To be eligible for MoneyLion Plus, users must verify their identity, have a constant source of income, have a bank account open for more than 45 days, and they must be able to display a positive bank balance. Credit scores are taken into account, but a good score is not required.
The Brigit app costs $ 9.99 per month and gives users instant access to $ 250. Additional features include the ability to set up automated advances, free instant transfers, and free extensions for those who need a little extra time to pay off what they have borrowed. Brigit does not consider credit scores as part of their eligibility criteria, but users must have a bank account and recurring income from a single source.
Are these advance paycheck applications appropriate for larger loans?
In short, no. Low cost personal loans are the avenue to explore for larger borrowing as opposed to the short term loan solution offered by cash advance applications. LendingClub or Prosper are examples of lenders who offer longer loan terms and better terms for this type of loan, but they are not suitable for providing access to money in a pinch.
Cash advance applications and responsible use
Early paycheck apps and apps like Dave can be a useful interim solution to help entrepreneurs and startup employees avoid unpaid bills, operational expenses, and even small overdraft fees. However, this should not be relied upon regularly, as transfer / subscription fees can add up over time and leave users even more out of pocket. Think of these tools as a rich uncle who can help you through a dead end. You can get him a loan every now and then, but you don’t want to depend on him every month.
Additionally, frequent use of these services can lead to a vicious cycle of addiction, especially for low-income people in disadvantaged areas, or for anyone setting up a startup. Entrepreneurs who often resort to constant borrowing will undoubtedly have a hard time developing good financial habits, such as building up savings, as they will be trapped in the long run, bill to bill and paycheck to paycheck. .
The bottom line: Like all types of loan products, cash advance applications should only be considered if absolutely necessary. If you are in this situation, I hope you find these tools useful.
On the other hand, do you know what the money is for in prison? Top Ramen or stamp book. If you’re interested, you might also want to learn how to make a tattoo gun from a Walkman motor or start a fire with gum wrap and a battery. All of these things are in my new prison comedy book, Don’t Drop the Soap. Presale starts July 15th. Sign up for alerts and get more information here: Don’t Drop the Soap.