Cash Advance Apps: What They Are and How They Work

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?

If so, you may be a good candidate for a cash advance app. 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.

Boro

Boro is a relatively new money tracking and micro-lending app that allows students to draw on a line of credit. Once your account is created, a $2,000 line of credit is available as needed. When you pay off the borrowed amount, you don’t need to apply again to initiate another draw (i.e., borrow). Just access the amount that is needed and pay it back over time.

Read our full Boro review here.

Cash Advance Limits

• Up to $2,000

Requirements

Since college students often don’t have a credit history (86% of Boro customers don’t have one), Boro uses other methods to evaluate creditworthiness. Also, having a Social Security number (SSN) or cosigner is not required.

Costs

No fees, only the interest on any loan you take.

Bonus: Right now you can get a $5 bonus when you sign up and connect a bank or credit account.

Earnin

Earnin is a free cash advance app that allows users to withdraw up to $500 of money they’ve already earned. If you need a hundred bucks to pay off a parking ticket or meet your rent, Earnin is the app that will help you access your money before payday.

It recently got a little flack from the NY AG, but the adjustments it's made have made it better for consumers.

Cash Advance Limits

• $100 initially
• Up to $500 with use

Requirements

• Must be paid via direct deposit
• Must have checking account at supported bank
• Be employed in a physical location or have an electronic time management system

Costs

It is free. Earnin works on a tip model. If you can afford it, pay it back over time.

MoneyLion

MoneyLion is a fee-free checking account that offers a free cash advance up to $250. This is an account that I highly recommend for people struggling to break the paycheck-to-paycheck cycle.

Cash Advance Limits

• Up to $250 with Core membership (free)

Requirements

• Must have a MoneyLion checking account
• Must have funds direct deposited to your account

Costs

MoneyLion Core is free. MoneyLion Plus costs $19.99 per month, but is not required for the cash advance.

Read our full MoneyLion review to learn more.

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.

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