Apps that give you your paycheck early

Earnin is an app that lets you draw small amounts of your earned wages before payday. Instead of charging interest, Earnin asks users to provide an optional tip for the service.

Earnin’s Cash Out paycheck advance is an option in an emergency and best used infrequently. When you add the tip, you’re essentially paying someone else to access your earnings.

Earnin says it offers "access to earned wages," rather than a paycheck advance or loan. NerdWallet describes Earnin's product as a paycheck advance or loan because the app is a middleman that provides cash and takes it back on the following payday.

Is the Earnin app right for me?

When used occasionally, Earnin can be useful if you:

• Have a small emergency expense.

• Can use your next paycheck to cover the money owed to the app on top of other regular expenses.

• Use an electronic timesheet at work, have a work email or a fixed work location.

• Have a checking account and are paid by direct deposit.

• Don’t want to overdraw your bank account and pay an overdraft fee, which costs $35 on average.

Earnin might not be a good solution for you if you:

• Regularly spend more than you earn.

• Work independently or have multiple employers.

Consumer advocates warn that paying to get your earnings early is not a healthy long-term habit.

“It's cheaper than a payday loan, but I fear that people get into the habit of spending their wages early and end up paying to access their wages on a regular basis,” says Lauren Saunders, associate director at the National Consumer Law Center.

Earnin’s paycheck advance feature shouldn’t be used in place of building an emergency fund, which can cover common financial shocks.

A good first goal for an emergency fund is to build up $500, which is the maximum amount users can get from Earnin in a pay period.

🤓Nerdy Tip

Maintaining a budget that includes money for everyday expenses, savings and something fun can also help you avoid living paycheck to paycheck. NerdWallet recommends using the 50/30/20 budget, which divides your money into needs, wants and savings.

What you should know about Earnin

Fees

Earnin charges two fees, neither of which is mandatory:

Express fees: Users who want their funds immediately can pay a fee from $0.99 to $3.99. Without this fee, it takes one to two business days to receive funds.

Tips: Users can opt to donate a “tip” of any amount, but regular tips add up. A $5 tip on a $50 withdrawal due in two weeks is an annual percentage rate of 260%, slightly lower than the rates that payday lenders charge.

Earnin says APR is an unfair way to measure the cost of its tips; however, APR is the best apples-to-apples comparison across all credit products and can help you decide if one option is priced fairly compared to others.

If you use it sparingly, Earnin can be cheaper than overdrawing your account or taking out a payday loan.

Location and bank account access

To know that you went to work, the company requires an electronic timesheet or an uploaded photo of one. If you don't have a timesheet, the company asks for your geographic location data so it knows that you were physically at work.

Earnin also says it requires your checking account information to verify that you’re the account’s owner and that its deposits and withdrawals go through.

Low-balance assistance

The app has an overdraft notification feature called Balance Shield Alert that tells you when your account balance falls below an amount that you specify.

If you opt in to the Balance Shield Cash Out feature, Earnin will also send up to $100 to your bank account when your balance drops below $100. The amount sent will count toward your daily and pay period borrowing limits.

When setting up the feature, Earnin asks you to set a tip that you’ll automatically pay when it’s triggered. This tip is required.

How the Earnin app works in 6 steps

1. You create a profile on the app and give it access to your checking account. Anyone can download Earnin, but to use it, you must receive your paycheck via direct deposit.

2. Earnin tracks the hours you work. It does this differently depending on your job.

3. You can access money only once you've earned it. First-time users can access up to $100 in a pay period. You may get access to more or less money after that. Users can access a maximum of $100 per day, up to $500 per pay period.

4. When you request money, Earnin verifies your hours worked. The company says this takes about 10 minutes if you submit through the app.

5. Once you choose an amount, Earnin asks if you want to tip. Tips can be between $0 and $14, which Earnin deducts from your paycheck on payday along with the money you borrowed.

6. You will receive your money in one to two business days if you request on a weekday, and on the next business day if you request over the weekend. There’s an option to pay a fee to get the money immediately.

Salaried workers: The app may use location tracking on your phone to verify that you went to work. Users who work from home can track the hours they work as long as they submit a work email address to verify employment.

Hourly workers: Upload photos of your daily timesheet or use location tracking.

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