Popularity of Paycheck-Advance Apps Soars with 33% of Americans Now Signed Up to Borrow, Survey Shows

Cash advance apps can help workers access wages before payday, but they can be as costly as payday loans — and many borrowers can’t repay

The biggest problem with cash advance options is the very high interest rates. Consumers should avoid “tipping” — it is a hidden fee and not at all transparent.”

— Dr. Priya Raghubir, Professor of Marketing at NYU

AUSTIN, TEXAS, USA, October 18, 2022 /EINPresswire.com/ — Now more than ever, Americans are struggling to pay day-to-day expenses. For anyone who might need a boost, a paycheck-advance app may seem like the ideal solution.

These apps offer cash advances with no credit check. Many don’t charge interest, but they all charge an optional tip. These apps, which include lenders like Dave, Albert, Brigit and Chime SpotMe, for example, are growing in popularity as an alternative to high-interest payday loans, even as consumer advocates question their transparency.

DebtHammer.org has found that more than 33% of Americans have now signed up for at least one of these cash-advance apps. Of that group, 95% have used them for at least one short-term loan, which many couldn’t afford to repay.

Oct. 31 is World Savings Day. To mark this, DebtHammer surveyed 786 Americans to learn just how many Americans have had to use a paycheck advance app. Here’s what we found:

Key takeaways
Borrowers can’t afford to repay the advances: Of cash advance app borrowers, more than 31% struggled to repay their loans as scheduled. About 17% said they repaid the loan by skipping another bill, while 6% repaid the loan a few days late. Another 4% borrowed from a different app to repay the first loan, more than 2% used a payday loan and 1.6% defaulted.

Many are previous payday loan borrowers: About 78% of cash advance app borrowers have previously borrowed money from a payday lender.

They don’t solve the underlying problem: Over 22% said they weren’t able to borrow enough to cover their emergency expense, with more than 10% saying they borrowed money from more than one app at one time and 6% combining the money borrowed from the cash advance app with a Buy Now Pay Later plan.

Read the full report at debthammer.org/cash-advance-apps-survey.

DebtHammer is an industry leader in the business of fighting to get Americans out of debt.

Please email media@debthammer.org for more information, or if you would like to schedule a phone or video call with DebtHammer’s Founder and CEO, Jake Hill. Feel free to embed any of the visuals included in the report on your website, or to use or edit the raw files as needed. Full data sets are available upon request.

Jake Hill
+1 214-542-2502
email us here

Popularity of Paycheck-Advance Apps Soars with 33% of Americans Now Signed Up to Borrow, Survey Shows 3