Companies Utilizing Daily Pay Apps

This article is a summary of the YouTube video ‘More companies using daily pay apps’ by Scripps National News

Written by: Recapz Bot

Written by: Recapz Bot

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Companies offer early access to paychecks, but there may be fees.

Key Insights

  • Companies are using different strategies, including early access to paychecks, to attract employees.
  • Early access to paychecks allows workers to get paid every day, but there may be fees associated with using the apps.
  • Some apps charge fees for transferring wages to a bank account, ranging from $2.00 to $5.00.
  • Experts from the National Consumer Law Center suggest that such apps should be used occasionally, as consistent use can lead to accumulating fees.
  • It's crucial to understand the costs and consequences of using these apps, as they work similarly to payday loans and can result in high APRs (200%-300%).
  • Experts call for regulation of these apps to be covered by interest rate limits, as fees can add up significantly.
  • Companies like DailyPay claim they are not payday loan companies since there is nothing to repay, comparing their business model to ATM fees.

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Transcript

Aside from offering higher pay, companies are trying other things to attract employees. That includes some starting to offer early access to paychecks.

Now this can allow workers to get paid every day, but it’s not a perfect perk. Depending on the app they use, workers would have to pay a fee to get early access. The daily pay app charges $2.00 if a user wants to transfer their pay to the bank account on the same day it’s earned. The app called Branch charges up to $5.00 for a transfer depending on how much money they’re moving into their account. There are also apps like Earnin that allow people to access their pay early, but they encourage users to tip what they think is fair rather than charging explicit fees.

Consumer wallets fees can vary between $2.00 and $10.00. Experts at the National Consumer Law Center say these apps can be helpful, but only if their use is occasional. If using them becomes a routine and if you’re paying fees every time you’re accessing your pay early, you’re essentially just paying to be paid and may have gotten yourself into a difficult situation.

Experts say it’s important to understand all the costs associated with these apps. Users should also realize that these apps work like a payday loan, and using them excessively could have serious consequences. That’s why experts want these apps to be regulated just like loans. They believe that interest rate limits should be imposed, and the fees on these early wage loans can add up to the equivalent of 200% to even 300% annual percentage rate (APR), which may not be obvious when you’re just paying in advance. So it’s really important to be aware of the long-term costs.

Now, companies like DailyPay argue that they don’t function like a payday loan company because there’s nothing to repay. Instead, they say their business model is comparable to ATM fees.

This article is a summary of the YouTube video ‘More companies using daily pay apps’ by Scripps National News