The Trouble With Earned Wage Access Apps

“Living paycheck to paycheck” is a euphemism.  Most people who fit into that category do not have enough money to make it until payday.  Furthermore, there is a sharp divide between the upper middle-class paycheck to paycheck set, on the one hand, and the rest of us, on the other.  The former have credit cards; they are also more likely to have friends and family who can lend them small amounts of money to last until payday, or at least to lend their cars or their Costco cards to help them save on small expenses.  The latter have long since maxed out their low credit limit credit cards, if they even qualified for them in the first place.  They are also more likely to receive their employment income through apps or employer-issued debit cards, as they are less likely to have bank accounts.  Earned wage access is a common feature of payroll apps, but the Consumer Financial Protection Bureau (CFPB) has issued a statement implying that earned wage access apps are just payday loans in disguise.  If you get paid through an earned wage access app and the result is that you have a negative income, contact a Miami debt lawyer.

When Your Own Employers Issues Predatory Loans to You

At first, earned wage access apps seem benign.  What could be so bad about an app that shows you how much money you have earned toward your next paycheck?  The problem is that the apps let you borrow some or all of that amount before payday.  It would not be so bad if the worst consequence was that, on payday, you did not get any money, but you had already paid the bills you owed with those wages you had received in advance.  Unfortunately, earned wage access apps are worse than that.  They might give you your wages in advance, but they expect you to pay it back with interest.  As with so many financial products marketed to financially vulnerable consumers, the interest rates and fees are astronomical.  At their highest, they exceed 100 percent, comparable to old-fashioned payday loans, but at their lowest, they are still more expensive than even the most expensive credit card.

Alternatives to Earned Wage Access Apps

When people use earned wage access apps, they do not do it because they are content to pay more than 100 percent in interest and fees; they do it because they have few affordable options.  If you cannot qualify for a credit card, buy now pay later (BNPL) is your best option.  BNPL has its risks, but most BNPL agreements start out with zero interest, and they do not require a credit check.  Unless you are hit with an unexpected avalanche of expenses, you are unlikely to fall behind on BNPL payments, because the installment amounts are usually small.

Work With a Debt Lawyer About Coping With Consumer Debt

A South Florida debt lawyer can help you if you work constantly but are struggling to make ends meet.  Contact Nowack & Olson, PLLC in Miami, Florida to discuss your case.

Source:

apnews.com/article/earned-wage-access-loans-tips-personal-finance-146c02d5af5bdff5032ddc93a15eee3c