Need a cash advance? The new way to get money before payday


Money in a wallet | Source: iStock

Your brakes are down. The water heater is kaput. Your child had to go to the emergency room. If you’re like many Americans, finding the money to pay for those unexpected expenses is a struggle. According to a GoBankingRates survey, over 60% of Americans have less than $ 1,000 in savings, and thin bank accounts mean many are turning to expensive alternatives like a payday loan, cash advance, or credit cards. credit to cover the cost of small life crises. But a few companies are offering a new – and they claim it’s better – way to get money when you need it. The service is so new that people haven’t even agreed on its name, although some call it “instant pay”.

Here’s how it works: Rather than waiting around payday to get the money you’ve earned, instant payment services from companies like PayActiv, FlexWage, and Activehours let you draw on a future paycheck. You get the money you’ve earned when you need it instead of getting it as a lump sum every two weeks. Some companies like PayActiv and FlexWage partner with companies to offer the service as a benefit to employees, while others, like Activehours, are available to everyone. The Uber carpooling service even offers an instant payment service to its drivers.

The details of each offer vary, but all feature the service as a way for cash-strapped workers to get cash fast while avoiding expensive payday loans, auto title loans, overdraft fees. and credit card debt. A two-week payday loan can cost $ 15 for every $ 100 you borrow, which translates to an APR of 400%, according to the Consumer Financial Protection Bureau, while median overdraft fees are $ 34. Services like FlexWage’s PayActiv and WageBank charge a lower flat fee – at FlexWage it’s $ 5 per transfer – for early access to your next paycheck. No interest is charged and there are limits on how much money you can get, so you can’t go too deep in the hole.

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