In theory, earned wage access gives workers access to their pay without waiting until the end of the next pay period. In practice, does it actually work or is it a another scam from fast-talking fintech companies?
Earned Wage AccessThe advances of financial technology have given companies the ability to pay their employers for time worked at any time. In a day and age when “getting an advance” on your pay is no longer allowed, this earned wage access gives working class people more financial freedom.
Previously, people living paycheck to paycheck had very few options when they needed extra money. This made them vulnerable to predatory lenders, who were the only businesses willing to lend these people money. These loans ultimately put the people even further in debt then they were before.
This early access to pay is not a loan, merely an early collection of earned wages, and might help a lot of people avoid the cycle of debt.
What’s the Catch?Fintech, or financial technology, is a new breed of tech that wants to improve your access to money. With banking software, lending apps, and other advances, fintech works to make the world a smaller place.
That said, it is a business. Businesses exist to make money, and companies who offer earned wage access need to get paid as well.
It is not the employers that actually run these earn wage programs, they simply allow an outside company to set up with them and deal with the employees. For this reason, you can’t always be sure what the terms are.
A well vetted company will provide this service for a very small fee, but other companies charge usurious rates and have a lot details hiding in the fine print.
One thing is for sure – earned wage access is a rapidly growing service, one that more Americans need every year.