Life sometimes throws us a curveball and leaves us short on cash. In such instances, payday advance apps can be an invaluable help.
But if you find yourself using them too frequently, it could be indicative of larger financial troubles. Seek professional assistance or create a budget to better manage your money.
Payday loans
If you find yourself short on cash and need additional funds until your next payday, a payday loan may be beneficial. Unfortunately, this type of lending is an unwise way to borrow funds and could put you into debt if not paid back on schedule.
Lenders often target low-income borrowers, particularly those on fixed income or living in impoverished areas, by charging exorbitant compounding interest and offering no feasible repayment plan.
Many borrowers take out multiple loans over time in order to cover recurring expenses. This practice, known as “rollovering” or “renewing,” can create an overwhelming debt cycle that is hard to break free of.
If you require additional funding, try to negotiate with your creditors and ask for more time to repay. This can make it simpler to manage your finances and avoid high-cost payday loans. Alternatively, try taking out a personal loan from your credit union; these are less costly than payday loans but still carry fees.
Credit cards
Credit cards can be a great way to save money until payday. But, if used incorrectly, they could make managing your money in the future more challenging.
Credit cards are plastic or metal cards that provide access to a line of credit. Every time you make a purchase, the issuing bank deducts money from your account in order to cover the expense.
Once you borrow money, it must be paid back either at the end of the month or over time. This type of borrowing is known as revolving credit and the bank that issued your card sets a credit limit that you may borrow from.
Every month, your card issuer will send you a bill detailing all purchases posted to the account during that billing cycle. If you don’t pay off the balance by the due date, they may charge interest on it. Some credit card issuers allow automatic deductions from your bank account in order to avoid late fees altogether.
Payday advance apps
Payday loan apps provide a way for people to borrow money until payday without having to pay exorbitant interest rates. They’re an increasingly popular solution for those who find themselves short on funds.
However, if you rely on payday advance apps too frequently, they can cause financial harm. Repeat borrowing can create a vicious cycle of debt and cash-flow shortages that is difficult to break free from.
Dave is a banking app that offers paycheck advances of up to $250 and credit-building services. Additionally, it has automatic budget tools and a checking account protection feature which will top up your bank account with a small fee when you’re about to overdraw it.
Dave stands out among paycheck-advance apps by charging both a monthly membership fee and an additional fee for “Express” funding of your advance. This can be an issue when you need your money quickly.
Alternatives
If you need extra funds until payday, there are many alternatives to payday loans. Many of them provide lower fees or interest rates, longer repayment periods, and credit building opportunities as well.
Some solutions are creative, such as payroll advances from your employer or friends/family loaning you money. Others are more traditional, like going to a pawn shop or taking advantage of your local credit union’s Purchase Assistance Program (PAL).
Nonprofit organizations and community centers have a wealth of resources for people in need of assistance with unexpected expenses. In some cases, these groups provide donated food, clothing or bus tickets to medical appointments.
Another option is to borrow cash on a credit card, though this can be costly. Credit card companies charge fees for each cash advance and have high APRs too.
