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Cash Advance Apps: What to Know

Sometimes you need a little cash. It could be an unexpected expense that threatens your budget, or a bill that arrives before payday. Either way, life can have a way of subverting whatever plans we may have. When that happens, cash advance apps claim they can lend a hand. Here’s what you should know before you sign up.

The gist

Although they have existed for quite a while, cash advance apps have recently started to enter our collective consciousness through aggressive advertising. Of course, these apps make lofty claims of what is essentially free and instant money, but there’s more to these apps than meets the eye. To summarize, cash advance apps offer exactly that, a cash advance. The money is far from free; rather, it comes from your paycheck. Using various forms of verification, cash advance apps offer you a portion of your earnings as essentially a small loan, which is then paid off when payday arrives. Sometimes these apps charge a small fee (typically a few dollars). Other times, they merely ask for an optional tip.

What to look out for

As the saying goes; if it sounds too good to be true, it probably is. This doesn’t mean cash advance apps should be avoided entirely, it just means that caution should be exercised. For instance, many of these fees (and even tips) can add up to egregiously high interest rates, just like a payday loan. It’s also worth noting that many of these apps require access to your bank and payroll information, so it’s important to be careful. The money is also never guaranteed and the approval process can take significantly longer than the apps promise.

To summarize

In a pinch these services can do a great job of helping you avoid overdraft and late payment fees, but it’s important to remember the pitfalls. The most important takeaway is that these will not fix your budget. If you consistently need to utilize these apps, then it may be time to review your budget and get your cash flow under control.

Sources:

www.nerdwallet.com/article/loans/personal-loans/paycheck-advance-app-pros-cons