Best Paycheck Cash Advance Apps: Pros And Cons

Cash advance apps are growing in popularity to help people close small gaps in their monthly budget. These apps usually provide interest-free loans, but most charge a monthly service fee for the privilege. 

Are you struggling to pay your rent or bills on time? Are late fees, overdraft fees, or high-interest credit card debts threatening your ability to save?

These apps are cost-effective tools to jumpstart your cash flow, so you can right your financial ship.

Now, ideally you wouldn’t have to use these services – but we’re not here to judge. If you do need them, they may be a better option than paying large overdraft fees or late fees. But hopefully you also take a bit of time to analyze your income and spending and course correct as needed.

So, if you need a cash advance, here are the best cash advance apps today.

What Is a Cash Advance App?

Cash advance apps are apps that allow you to deposit money that you’ve already earned into your checking account before payday. Generally, these apps are free or charge a nominal fee, but they don’t charge interest on the loans. Even with the upfront fees, these are an inexpensive alternative to payday loans or even credit cards.

For people struggling with cash flow, the cash advance apps can offer a tool to break the paycheck-to-paycheck cycle.

Best Cash Advance Apps

Right now, cash advance apps are fairly limited. Some have high upfront fees, others are just marketplaces for payday loans. These three apps actually allow any hourly employee to access money they’ve already earned. They also have reasonable pricing policies.

Empower

Empower is an app that offers Cash Advance of up to $300 for new customers and $350 for returning customers**. They don’t charge any interest or late fees. They also don’t run any credit checks.

Read our full Empower review here.

Empower is a financial technology company, not a bank. Banking services provided by nbkc bank, Member FDIC.

Cash Advance Limits

• Up to $300 for new customers, $350 for returning customers

Requirements

Empower uses your bank account history and activity, recurring direct deposit, and average monthly direct deposit to determine if you’re eligible to receive a Cash Advance.

Costs

Empower is free for the first 14 days and will then cost $8 per month. You get access to all money management features, including saving, budgeting, and Cash Advance. 

These Apps Need an Employer Sponsor

While the apps above are available to all users, there are similar apps that certain employers offer to employees as a benefit. If you work for a large corporation, be sure to check if you qualify for a free cash advance through one of these apps:

• Branch
• DailyPay
• PayActiv
• FlexWage

Important Tips for Breaking the Paycheck-to-Paycheck Cycle

While it’s great to have access to up to $500 before your next paycheck, an even more important consideration is how to break the paycheck-to-paycheck cycle altogether.

Breaking the cycle isn’t easy. In some cases, breaking out of the cycle for good will take multiple tries, especially if you’re not a high-income earner. That said, most people can take steps to break the paycheck-to-paycheck cycle, pay off debt, and start investing.

Here are a few steps you can take to break the cycle.

1. Understand How Much You Need to Earn

If you’re early in your career or you’ve struggled to grow your income over time, there’s a good chance that your cash flow problems aren’t due to excessive spending. Rather, a low income could be driving you to feel a financial pinch month in and month out.

I recommend looking at the living wage calculator for your area (and family type). The living wage calculator recommends hourly and annual earnings requirements for you to avoid the need of government subsidies. If you’re earning less than the recommended wage, you’re not wasting too much money. Instead, your focus needs to be on earning more.

Not sure how to earn more? Start by evaluating whether your main job has upward income possibility. Often, changing companies can help you grow your income by 20% or more overnight. If that’s not an option, you may need to consider switching to a more lucrative industry.

Another option is to pursue a freelance career where you have higher earning potential. However, these options tend to have a longer-term focus. To move the needle immediately, you may need to take on a side hustle. While some side hustles only help you earn a few dollars per week, there are plenty that allow people to earn $1,000 or more each month.

2. Review Student Loan Payments

If you owe a lot of money in student loans, one of your best options is to put your loans into an income-based repayment plan. With this repayment plan, your monthly payment is based on how much you earn.

It won’t help you pay off your loans fast, but it will help you get control of your cash flow, especially if your debt is large relative to your income.

3. Build Up a Cash Cushion

As soon as you have a gap between your income and expenses, your first goal needs to be building up a cash cushion. Even a $1,000 cushion can help you avoid the need for cash advances or credit card debt.

Struggling to build up a cash cushion? It can help to cancel automatic subscriptions that are eating into your budget. Using an app like Trim can help you identify subscriptions that are hurting your bottom line.

Once you’ve gotten rid of the vampire expenses, consider switching to an “all-cash” budget. Put your debit and credit cards in a drawer, and only use cash for your variable expenses such as groceries, gas, and even your utility bills. Only use your bank account to pay for fixed expenses such as rent and your phone bill. Switching to actual cash makes it much easier to proactively plan your budget.

4. Pay Off Your Debt

While a higher income will help you break the paycheck-to-paycheck cycle, staying out of the cycle means cutting your expenses.

By eliminating debt (especially credit card debt and auto loan payments) you’ll have more room in your budget to absorb small emergencies like a car repair, your kid suddenly growing three shoe sizes, or a medical bill.

5. Be Dramatic About Cutting Expenses

Sick and tired of living in the check-to-check cycle? If so, dramatically cutting expenses (to the point of discomfort) could be a good move at least for a short time.

Move back home with your parents or another relative (even if you’ve got a kid), take on a few roommates (if you own your house), arrange your work schedule so you and your partner work opposite shifts and don’t have to pay for child care, sell your car and walk, bike or take public transit everywhere, get rid of your smartphone and drop to a call-and-text-only plan, never eat out (literally), and the list goes on.

Obviously, not all these suggestions apply in every circumstance, but they may all be worth considering for a period of time. This dramatic downshift in spending isn’t comfortable, but it doesn’t have to be forever. Instead, you can drop your spending for a few months or a year while you grow your income, save money, and break the check-to-check cycle for good.

Why Should You Trust Us?

We have been following the growing space of cash advance apps since they first emerged about 5 years ago. Since then, we’ve reviewed and tested many of the cash advance apps in the marketplace – as well as followed the news and controversies that have surrounded several of these products.

Along with cash advance apps, we’ve also reviewed and compared many of the alternatives, including personal loans and tax advance loans.

Furthermore, our compliance team regularly reviews the companies in this comparison to ensure that all rates and terms are accurate. 

Who Are These For And Should You Use Them?

These cash advance apps fill a void for some consumers who are short on cash before payroll. They don’t need (or want) a full personal loan, and they may not know where to get the cash they need. These apps work by connecting to your banking history and seeing if you’re worthy to get a small loan.

The downside is that these apps due charge a monthly fee. So, while you’re not paying astronomical interest like you would for a payday loan, you are paying a monthly fee that can add up. 

For example, if you’re paying an $8/mo fee – that’s $96 per year. If you’re borrowing $250, that would be the equivalent of 38% interest assuming you had the loan for 12 months. That’s still a lot.

These apps are great to fill a stop-gap, but the longer term solution is fixing your budget.

DISCLAIMERS

** Eligibility requirements apply.