You may be asking yourself, “How do apps like Dave and Earnin make money?” It’s a great question, and we’ve outlined a few ways these startups make their money. Before you download any apps, check their reputation. Read up on the founder’s background and check out the Better Business Bureau. Read reviews on the app store as well. Cash advance apps are preferable to payday loans, as they typically don’t charge high interest rates. In addition, they’re easier to access, too.
For example, Dave is a personal finance app that launched publicly in 2016. It offers an advance of up to $250 for a one-time fee of $1.99. Dave also charges no interest, and is incredibly affordable, with a $9.99 yearly membership fee. However, this has not been without its problems. In July, the Dave website announced a massive data breach, which affected 7.5 million users. While this breach didn’t compromise any personal information, it did compromise encrypted Social Security numbers. The company’s ETA for cash is one to three days.
While these apps offer a similar service, the main difference between them is their interest rates. Vola charges $4.99 for a monthly membership and allows borrowers to borrow up to $300. At that rate, the average consumer will spend $16.66 per $100 borrowed over two weeks. In contrast, the 151% APR of the Possible loan will leave you with $15 in expenses per $100 borrowed over eight weeks. Moreover, the longer the payback period, the higher the sunk costs. In short, cash advance apps are less expensive than traditional payday loans.