Navigating Finances: Earned Wage Access vs. Payday Loans

We get it—financial security is on everyone’s mind. When unexpected bills pop up, the stress can be overwhelming. A staggering 72% of U.S. workers live paycheck to paycheck, making those surprise bills a significant concern.

Even everyday expenses between paychecks can cause anxiety. Managing these payments can be challenging if you find yourself squeezed for cash.

Let’s face it: financial stability is a top priority.

Fingercheck’s Pay On-Demand offers an alternative to payday loans by allowing employees to access their already-earned wages.

The Board of Governors of the Federal Reserve System’s recent report highlighted that 125 million adults can’t cover a $400 expense with readily available funds. This is where Earned Wage Access (EWA) comes in—an essential financial tool. Also known as “wage advance,” EWA lets employees access some of their earned wages before their regular payday, providing a safety net and some financial flexibility.

EWA can be a lifeline for the 21% of U.S. employees who prefer access to their wages as they earn them. It’s a way to meet financial commitments without traditional payday loans or credit cards.

Unlike payday loans, EWA programs don’t involve credit checks or reports to credit agencies. Eligibility is based on employment length, ensuring employees can access their money without credit checks.

How does wage access affect your wallet?

Unlike payday loans, EWA programs don’t involve credit checks or reports to credit agencies. Eligibility is based on employment length, ensuring employees can access their money without credit checks.

Here’s a crucial difference: EWA programs are not loans. In contrast, payday loans are loans subject to varying regulations across states. With EWA, employees avoid interactions with credit reporting agencies, and eligibility is based on employment history.

One significant distinction lies in debt collection practices. While payday loans may engage in debt-collecting activities, EWA programs do not. If a borrower defaults on a payday loan, the lender pursues collection of the debt, deducting the money from the borrower’s next paycheck. EWA programs simply remove the amount from the next pay cycle without engaging in debt collection.

Payday loans often involve rollovers, allowing borrowers to defer their loans. However, EWA programs don’t offer this option. Rollovers contribute to repeated borrowing, with the average payday loan borrower paying $520 in fees to borrow $375 over five months.

EWA ensures there are no rollovers. The amount is simply deducted from the next pay cycle, preventing extended cycles of debt. Moreover, EWA is a more cost-effective option, with a flat fee per transaction, eliminating the need to contend with initiation fees and interest rates associated with payday loans.

Ready to get EWA?

Ready to take control of your financial well-being? Explore Earned Wage Access —because managing your finances should empower, not burden.

*If your employer uses Fingercheck Payroll, you can access Pay On-Demand by requesting the feature. While there is a $2.99 fee for each transaction, it’s a far more economical choice than the high costs associated with loans or credit cards.