Pay Advance Apps Cost Users Over $200 a Year as 96% of Advances Carry Fees
Updated
Updated · The New York Times · Oct 2
Pay Advance Apps Cost Users Over $200 a Year as 96% of Advances Carry Fees
3 articles · Updated · The New York Times · Oct 2
Summary
A new analysis found workers using direct-to-consumer pay advance apps pay more than $200 a year on average, despite marketing that often suggests low-cost or free access.
About 96% of advances included a fee or "tip," the Center for Responsible Lending report said, putting the average monthly cost near $17.
The apps let workers access earned wages before payday, typically to cover gaps such as groceries, rent or car repairs while waiting for a full paycheck.
Most borrowers earn under $50,000 a year, according to a 2023 government report, making even relatively small recurring charges a heavier burden amid high living costs.
Marketed as free, some cash advance apps hide APRs up to 1,000%. Could your low-cost financial lifeline actually be a predatory loan?
While consumer cash apps drain hundreds from struggling workers, why are employer-sponsored wage access programs quietly offering the exact same service for free?