Posted: August 19, 2021 / 7:13 AM EDT
/ Update: August 19, 2021 / 7:13 AM EDT

CONSUMER REPORTS – Terry Patterson needed one last trip to see his father last summer. The only problem was that he didn’t have enough money.

So, Terry downloaded a paycheck advance app to his phone and took a $ 50 advance on his next paycheck.

“When I was able to do that, I had enough money to at least cover one of the… you know a little gasoline along the way, a few snacks,” Patterson said.

Paycheck advance apps allow you to request a portion of your next paycheck before payday, typically for a fee or subscription fee of between $ 1 and $ 10. Then, on payday, the advance is collected by debiting the money from your bank account or directly from your paycheck.

It sounds easy enough, but be careful not to overdo it.

“These services can be great in helping you get out of a traffic jam every now and then. But you really have to be careful not to make it a regular habit. If you end up using these services regularly, the fees you pay can add up, ”said Octavio Blanco of Consumer Reports.

Research has shown that people who use these apps tend to take out cash advances on a regular basis, which means they sometimes find themselves in a vicious cycle of borrowing. So, if you are having trouble paying your bills each month, consider finding a bank or credit union that offers short term loan services.

“The APR on these loans usually doesn’t exceed 36%, and they can also help you build your credit,” Blanco said.

As for Patterson, he found the use of a paycheck advance app very useful, but wouldn’t make it a regular habit.

“Cash advance situations can always have high credit issues and you want to be very financially responsible when looking at any of these types of things,” Patterson added.