USA: Cash advance apps see rising fees amid popularity

Digital Reinvention
11/11/2023 News

A recent study by Overdraft Apps reveals that cash advance apps have become more costly for consumers in the past six months. The research indicates that borrowing from the 17 most popular cash advance apps now averages $19.08, marking a significant 24% increase in costs compared to April.

Digital Reinvention
21/03/2023 Interview

Ally Tech Labs: the place to build tomorrow’s bank

This rise is due to fee hikes by several widely-used apps and the growing popularity of newer, more expensive options. These mobile apps are consistently among the most downloaded in the finance category, offering instant access to extra cash without interest or a credit check.

Fees vary widely, with borrowing $100 costing anywhere from $6.00 to $34.99. Varo, Vola, Cleo, and B9 stand out as the low-cost options, charging less than $10 in fees for a $100 loan.

The average cost of borrowing $50 is $14.07, $200 advances have an average cost of $26.95, and $500 advances average $60.78 in fees and tips.

Mitchel Harad, publisher of Overdraft Apps, emphasizes the importance of careful research, given the rising costs and growing popularity of these apps. With varying features, fees, and advance limits, a bit of research and comparison shopping can lead to significant savings.

SME Banking
10/01/2023 Interview

Lean: Banking the gig workers

Navigating cash advance app fees

None of the apps in this study charge interest, and most don't impose late fees. Instead, these apps charge one or more fees:

• Express Fees: Most apps offer the option of delivering funds within minutes, with an optional fee of $3.99 to $11.99 for a $100 advance. However, most apps can transfer money within a few days at no extra cost.

• Monthly Subscription: Some apps require a subscription for cash advance features, with rates ranging from $1 to $19.99 per month. This allows consumers to access multiple advances per month, reducing the effective cost of borrowing.

• Optional Tips: Eight of the 17 apps encourage users to leave an optional tip when requesting a cash advance, often with a pre-selected 15%. Tips can significantly increase the cost of borrowing, with seven of the tip-requesting apps being among the highest-cost options. 
However, each of these apps clarifies that tipping doesn't affect borrowing limits. Consumers can save by contributing a small tip or none at all.

Understanding fee structures can lead to substantial savings. For instance, borrowing $100 from Dave ExtraCashTM with a 5% express fee and a 15% optional tip, which is sent to an external bank account, costs $20. Opting for instant access through a Dave Spending Account with no tip reduces the cost to just $3, making it the most cost-effective choice. (Dave also charges a $1 monthly subscription fee.)

Cost calculations for this study are based on publicly available pricing information as of October 13, 2023, and assume one advance per monthly subscription fee, an express delivery fee to an external bank account, and the lower of 15% or the maximum optional tip for apps requesting tips.


For more detailed insights on this cost study and comparisons of cash advance apps, visit https://overdraftapps.com/how-to-borrow-100-instantly/

Related news & insights

Digital Reinvention
15/07/2024 Article

Financial Innovation Spotlight – July 2024 edition

This global innovation journey begins in Singapore, where OCBC Securities offers AI-driven personalized stock recommendations. Then we head to the...

Digital Reinvention
12/07/2024 Interview

NewTech Friday: Trustly – Offering fast, simple and secure online banking payments

Swedish scaleup Trustly is an open banking pioneer and a global payment method. Qorus’ Boris Plantier talked to Oscar Berglund,...

Digital Reinvention
11/07/2024 Interview

Creating the My World Super App: A peek into Yapi Kredi’s award-winning project

Yakup Doğan, Assistant General Manager responsible for Limitless Banking at Yapı Kredi, reflects on the Turkish bank's victory at the...

Digital Reinvention
11/07/2024 News

Indosuez Wealth Management expands "StartUp Connections" platform to new markets

Following its success in France, the platform now offers a simplified gateway to an international network of startups for these...

Mobility
11/07/2024 News

N26 partners with Bipi to offer €400 discount on car subscriptions

This collaboration marks a significant step in expanding N26’s customer benefits and highlights the growing trend of flexible car ownership...

Embedded Insurance
11/07/2024 News

APOLLO and Dream partner to offer digital insurance to residents

This collaboration aims to simplify obtaining comprehensive insurance policies for residents and help property managers efficiently track insurance compliance.

Mobility
06/07/2024 Article

AutoMobility Insights - July 2024 edition

The latest news from the automotive industry curated and commented by the experts at Corporate Value Associates (CVA).

Digital Reinvention
05/07/2024 Interview

NewTech Friday: LoyJoy – Democratizing chatbots

Ulf Loetschert, Managing Director and Co-Founder of LoyJoy, is on a mission to revolutionize the way businesses connect with their...