If you sometimes feel like there’s too much month at the end of your money, you’re not alone.
According to the 2016 National Financial Well-Being Survey conducted by the Consumer Financial Protection Bureau, more than 40% of American adults have trouble making ends meet. It’s one reason payday loans are such big business in this country. They promise a quick and easy way to tide yourself over until your next paycheck. But in the long run, they only make your situation worse by adding a whopping interest payment to all your other bills.
Thanks to modern technology, there’s a better solution. Several popular personal finance apps help you make it from one payday to the next by giving you access to your paycheck a few days early. That way, if it’s the middle of the week and your car battery just died, you can get the money to cover the repair without paying hefty interest and fees.
How Payday Advance Apps Work
Technically, the service these apps offer isn’t a loan; it’s a paycheck advance. In other words, it’s a way to get paid a little early for the work you’ve already performed.
A payday advance app pays you for some of the work you’ve already done this week, even if your paycheck is still several days away. The app transfers, say, $100 to your checking account, and when your next paycheck arrives, the app takes $100 directly from it to cover the cost.
It’s the same way a payday loan works but with one crucial difference: There’s no interest. When you receive your paycheck, all that comes out of it is the $100 you actually received, without an extra $15 or more in interest. The apps earn its makers money in a variety of other ways, including tips and monthly fees.
However, the lack of interest doesn’t mean there’s no downside. You’re still taking money out of your next paycheck, leaving yourself with even less to pay all the bills. For many, that leads to taking another advance before the next paycheck, and another the paycheck after that. Eventually, you’re stuck in a cycle. You’re always behind and dependent on the app and the advances it offers to get you through the month.
Taking a paycheck advance is only a stopgap measure. It doesn’t make your limited paycheck stretch any further this month than it did last month. Use it for the immediate cash you need to deal with an unexpected one-time expense. If you’re always behind, it’s time to either earn extra cash or tighten your belt a notch or two.
Pro tip: If you want to reduce your monthly expenses, sign up for Billshark. They will negotiate bills like your internet, cell phone, and more. They’ll also help you cancel subscriptions you might no longer need. Plus, if you send them a bill to negotiate, they’ll give you a $25 reward.
Top Payday Advance Apps
Some payday advance apps do only one thing: give you access to your paycheck early. However, most of them come with more features. Many apps provide online banking services, cash-back shopping, online investing, and tools for employers to manage their workforces.
Don’t just use the first app you download. Figure out which one has the features you really need and stick with that one.
Varo is an online banking service that can give you faster access to your paycheck. When you use direct deposit with your Varo account, your paycheck enters your account as soon as your employer transfers it. According to Varo, most employers submit their payroll files on Wednesday for a Friday payday, so using Varo can get the money into your hands up to two days earlier.*
Other features of a Varo Bank Account include:
- Varo Visa® Debit Card. The account comes with an EMV-chip debit card that bears the Visa brand mark. The app gives you the ability to lock this card instantly if it’s lost or stolen. You can link your debit card to your Apple PayTM, Google Pay, PayPal, Cash App, and Venmo accounts for online payments. You can also use Varo to Varo to transfer money instantly from your Varo bank account to anyone who uses Varo at no charge.
- Fewer Fees. Varo has no monthly fee, no minimum balance, no transfer fees, no foreign transaction fees, and no debit card replacement fees. It also provides fee-free access to more than 55,000 ATMs in the Allpoint® network in stores like Walgreens, Target, and CVS. You can even overdraw your account by up to $50 on a Varo Visa Debit Card transaction without incurring a fee once you qualify. To use this feature, you must make at least five qualifying debit card purchases each calendar month and receive total payroll or government direct deposits of at least $1,000 in the same calendar month.
- Push Notifications. Varo lets you know whenever money goes in to or out of your Varo Bank Account. It also tells you about all purchases and cash withdrawals using your debit card.
- Deposit Money. You can deposit checks remotely using the Varo app. You can also deposit cash into your account at any of more than 90,000 retail locations that use Green Dot Reload @ the Register™, though most retailers charge a fee for this service.
- Automatic Savings Tools. Varo offers two automatic savings tools to build up your nest egg with a Varo Savings Account. With Save Your Pay, you can automatically have a percentage of every paycheck transferred from your bank account (similar to a checking account) to your savings account, and you choose the percentage that gets transferred. Or, with Save Your Change, you can round up every transaction to the nearest dollar and it transfers that amount from your Varo Bank Account to your Savings Account.
- Live Customer Service. You can speak to a Varo customer service representative any day of the week during business hours. Monday through Friday, 8 AM to 9 PM Eastern Time (excluding Federal holidays), Saturday and Sunday, 11 AM to 7 PM Eastern Time (excluding Federal holidays). Reps are based in Utah and are available every day except federal holidays.
The Chime app doesn’t offer paycheck advances the same way some of the others on the list do. Instead, it’s an online bank account that gives you access to your pay faster. If you have a Chime account with direct deposit, your wages become available to you the minute your employer deposits them into the account. With most traditional bank accounts, you have to wait up to two days for the payment to clear before you have access to the money.
Chime is a full-service bank account you can use to transfer money, send and deposit checks, and pay bills online. It also offers a lot of other great perks most bank accounts don’t, including:
- No Hidden Fees. Most brick-and-mortar banks load down their accounts with costly bank fees. By contrast, Chime charges no overdraft fees, minimum balance fees, monthly service fees, transfer fees, or foreign transaction fees. It also offers fee-free access to a network of over 38,000 MoneyPass and Visa Plus Alliance ATMs.
- Banking Alerts. Chime helps you keep track of your money by sending you an alert any time it transfers cash into or out of your account. The app notifies you when your paycheck comes in or when you make a purchase with your Chime debit card. It also tells you every day exactly how much money you have in your account.
- Automatic Savings. Chime offers a savings account with built-in automatic savings features. For instance, you can arrange to have 10% of every paycheck transferred to your savings account immediately. There’s also a feature to automatically round up your debit card purchases to the nearest dollar and deposit the change into savings.
- Debit Card Blocking. If your debit card is ever lost or stolen, stop others from using it by disabling it right in the app with one swipe. And if you see suspicious charges showing up in a foreign country while you’re sitting at home, just shut off international transactions on the card.