Payday loans are one of the worst financial products. With interest rates that can climb above 400% (on an annualized basis), payday loans are costly and provide very little benefits. Payday loans are known as a “last-resort” option for cash-strapped individuals who need to pay for something in a hurry.
Today, there are options outside of payday loans. Innovations in fintech are providing people with less expensive ways to find short-term solutions.
These are our recommendations for the best inexpensive and free solutions. Some of these apps help you get your paychecks earlier so you can receive your funds when you need them and avoid tapping into expensive payday loans.
Get Paid Daily With These Apps
Getting your hands on your paycheck earlier can be an ideal way to avoid payday loans, and apps are making more frequent paydays easier to access.
Earnin is a free app that allows users to get a paycheck advance of up to $500. When you first use Earnin, you’ll be limited to withdrawals of $100, but that amount can grow with time.
Instead of getting paid twice a month, you can take out daily or weekly pre-payments (up to $500) to help with cash flow. It’s particularly useful if rent is due but your paycheck doesn’t arrive until a day or two later.
Earnin doesn’t charge fees. Instead, it relies on “tips” from community users. To use Earnin you must get paid by direct deposit, and you must have a checking account with a qualifying bank. Earnin will repay itself as soon as your direct deposit lands in the account.
Earnin is available to most W2 workers. If you work for a large employer you may be able to use one of these daily payment apps as well:
Accounts with Cash Advance Options
Today, the cheapest way to get a cash advance is to use a checking account with a low-cost cash advance option. These are some of the best options for people who regularly need up to $250 in advance. The accounts are ranked in order of their overall cost.
In most cases, you can use the cash-advance options whether you’re a W2 wage earner or a freelancer.
Low-cost Cash Advances
The solutions listed above are better than these fee-based apps, but low-cost debt is the next best solution. The best app for low-cost cash advances is Brigit. For $9.99 you can unlock cash advances up to $250.
This is a relatively high-interest rate for a short-term loan, but it is much less than the cost of regular overdraft fees. If you can’t use an alternative solution, low-cost cash advances may make sense.
Get Your Paycheck Two Days Early
One hot new feature in consumer checking accounts is the ability to get paid two days early. These banks deliver your expected paycheck two days early if you have set up direct deposit with the bank. In most cases, only W2 workers with reliable paychecks will qualify for this extremely short-term loan.
Check out this full list of checking accounts that offer early direct deposit.
Gigs With Daily Payouts
When you need money in a hurry, side gigs with daily payments may make sense. As a precaution, some of these gigs don’t pay well unless you’re working during a particularly busy season.
Ride-sharing and delivery apps typically offer instant or daily payouts for work you’ve done. The Ride Share Guy breaks down cash-out options for these types of gigs.
But apps aren’t the only way to get paid every day. You can also earn daily cash through babysitting, lawn mowing, and working other gig work in your local area.
Getting paid via Zelle, Cash App or Venmo is increasingly common, and you’ll need to pay a small fee to get instant access to these forms of cash.
Another way to get paid daily is to excel in a job in the service industry (particularly waiting tables and tending bar).
Service industry jobs typically allow you to take home cash after each shift. The work can be grueling, but the jobs often pay well (especially when you’re experienced).
You Don’t Need A Payday Loan To Get To Payday
Payday loans trap borrowers in a cycle of renewing loans month after month. With astronomical costs, it’s easy to get trapped by a “one-time cash advance.”
Don’t play the high-interest borrowing game. Choosing a better financial product, and finding ways to earn more can help you avoid high fees and interest rates.