If there’s one complaint about the financial system in the United States it is that the system isn’t fair. People with lower and unstable incomes often end up paying the most for financial services.
When you combine monthly checking fees (for keeping an insufficient balance), overdraft fees, and high interest debt (especially Title loans or payday loans), it is easy to understand why so many Americans struggle to get ahead. When the financial system seems stacked against you, it can be discouraging to try to make good money moves. But disruptive companies are looking for ways to serve underserved people.
Earnin is one of those disruptive companies. Earnin is a paycheck advance app that’s working to improve the financial lives of those living paycheck to paycheck. Here’s what you need to know about the app.
See how Earnin compares to other popular cash advance apps.
- Paycheck advance app
- Borrow up to $100 before payday
- No direct costs, relies on tips
Max Loan Amount
$0 (Optional Tipping)
How Earnin Works
Earnin is an app that allows workers to get an advance of up to $100 sent directly to their bank account. Instead of paying a fixed fee for the advance, users can opt for a tip (generally between $2 and $14). You can opt for a tip of $0 if you really need every last cent.
However, Earnin isn’t handing out free money. It knows that you’ll repay them because it only advances money when you’ve already earned it. The app will take a cut of your future check as soon as it is direct deposited to your checking account. To qualify for an advance you must meet all of the following criteria:
- You must be paid through direct deposit.
- Hourly workers must connect Earnin to their company’s online timesheet (or upload photos of their daily timesheet).
- Salaried workers must allow Earnin to track their location, so the app can confirm that they went to work.
- Gig economy workers can upload receipts or trip information to the App for early payouts.
Earnin also offers a Balance Shield option. This option is designed to automatically transfer money when your checking account balance reaches a certain balance (say $100). The first time you use Balance Shield, the service is free. After that, the app charges $1.50 per transfer.
Work From Home Features
In light of the COVID-19 pandemic, Earnin has launched several new features to help people who use their app. First, they are now allowing people to track hours worked from home even if they previously used GPS to track hours at a specific work location.
Second, they are allowing access to unemployment benefits through the app for those eligible. If you're not familiar, check out this article that deals with the special unemployment benefits available right now.
Can You Really Tip $0 (Making It Free)?
Yes. You can really tip $0 to use Earnin. However, if you set up balance shield, the company will automatically charge $1.50 each time the shield is triggered (the first transfer is free).
Generally, I think it makes sense to tip $1-$2 per advance if you can afford it. Tipping $1 for a $100 advance that you repay in two days is still a 182.5% interest rate. Of course, that’s much more reasonable than paying a $34 overdraft fee.
Are There Any Special Features?
Earnin allows users to submit medical bills to the app. The app has a Health Aid team that will negotiate for a payment plan or discount on your behalf. When the negotiation is done, you pay Earnin what you think is fair. If you’ve got medical bills (especially debt) this service can help you save a substantial amount of money.
I strongly recommend submitting medical bills to the Earnin app unless you actually negotiate the bills yourself. It won’t do you any harm to have someone try to negotiate the bill for you.
Think of this as the Truebill for medical bills.
What Are The Alternatives?
See our list of cash advance apps here.
That said, cash advances aren’t the only way to improve your cash flow. If you can be responsible with credit cards, they can help you float your living expenses for a few days while you wait for a check to come in. Look for a 0% APR credit card to get started.
Will Earnin Help Me Break The Paycheck-to-Paycheck Cycle?
Earnin is doing everything in its power to make financial management easier for those with low or unstable incomes. Getting modest advances for free goes a long way towards eliminating pesky bank fees and other costs that add up over time. Medical bill negotiation will also help many people who are financially struggling.
That said, to truly break the check to check cycle, your income will need to be higher than your expenses on a regular basis. No matter how frugal you are, it can be tough to make ends meet if you’re earning an entry level income.
It becomes even more difficult if you can’t get 40 to 50 hours of work each week. Side hustles can fill in the income gap, but most people see that as a short-term solution. For long term financial wealth, you will want to focus on building marketable skills and negotiating for higher wages from your primary job. This will give you extra money to start investing and leave the paycheck to paycheck cycle forever.
- Fees and Charges
- Customer Service
- Ease of Use
- Tools and Resources
- Products and Services
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here and here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.