You're in a cash-flow crunch again. An important bill is due, and you've earned the money to pay that bill – but it's not payday yet. You're on a two-week pay cycle and have to wait for another week or so before your money is available.
What are your options? Ask a friend or relative to loan you money for a few weeks. Take out a payday loan and pay painful interest rates. Make the payment late and run the risk of penalty fees and a drop in your credit score. Ask your employer for a payday advance. All these options can be embarrassing and unpleasant.
Many Americans take the payday loan approach – approximately twelve million each year, according to 2016 research from the Pew Charitable Trusts – paying a collective $9 billion in fees and interest charges.
Payday access apps like Earnin are designed to fill this cash-flow gap. As opposed to a payday advance or a payday loan where an employer or third-party loans you money against future earnings, Earnin allows you to access money you have already earned in close to real-time.
To use Earnin, you'll need to offer a connection to your bank account and provide employment information. Most banks support the Earnin app, including major institutions such as Wells Fargo and Bank of America, but check with your bank or credit union before signing up for the app.
Once you sign up and provide the necessary information, you'll be able to access funds from each working period by "cashing out" with a tap on your phone screen. The funds will be deposited into the bank for your use. Timesheets are not required, although if timesheets are used, the app can take them into account.
New users should attempt a small cash out right away to check for glitches or unexpectedly slow transfers. Each transfer step should be nearly instantaneous, but posting delays are possible. Check out the system before you need it in a pinch and assume it's instantly available.
How does Earnin make money? Users provide support by "tipping what they think is fair" according to the app description on the Google Play store.
Some employers offer alternatives to Earnin as part of an employee benefits package. PayActiv and FlexWage are employer-based programs that allow similar privileges to access money as it's earned.
FlexWage uses a reloadable debit card attached to your direct deposit account. The account is integrated with the employer's payroll systems, allowing access to money already earned – although there is a $3 to $5 flat fee for each early transfer. PayActiv charges a $5 monthly fee, but that fee also includes access to budgeting tools and bill payment services.
Employers must sign up to provide the FlexWage or PayActiv service. If your employer hasn't signed up for either service, Earnin may be your best choice for accessing your earnings before payday.
Applications like Earnin can save money by bridging a cash-flow gap. You won't have to make a tough decision between sky-high interest rates or potential late fees and dings on your credit report. You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips.
However, there's another alternative to consider that's open to everyone – an emergency fund.
Review your budget for areas where you can cut spending and divert savings toward an emergency fund. (If you don't have a budget, there's the problem – so make one now.) It won't be easy, but it'll be worthwhile. Eventually, savings will become a habit, and you'll have the peace of mind in knowing that you can handle a temporary financial hit with ease.
If you are interested in a personal loan, visit our curated list of top lenders.
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