When payday rolls around, do you hope you have enough in your account to get by until the next payday? Traditional payday lending is often the only option for people waiting for their paychecks.
There are a variety of service providers out there that give people access to their earned wages. You can use services such as earned wage access to manage your money better and avoid bad financial situations.
Yet, like a pay day loan, these advances carry a fee. So it is important to understand which will be better for you to get access to the money you need right away.
Read below and learn the difference between payday lending and earned wage access.
What Is Earned Wage Access?
Earned wage access is a system that allows workers to receive their wages already earned rather than waiting for their employers to pay them on a regular schedule. This system can be beneficial for workers who are paid hourly, as it allows them to access their earnings more quickly.
While earned wage access is not available in all states, it is a growing trend, and more and more employers are offering this type of payment option to their employees. If you want to learn about earned wage access, you can check out here for more info.
The Pros and Cons of Earned Wage Access
On the pro side, EWA can be a more flexible and affordable option than payday lending. EWA providers charge lower fees than payday lenders, and borrowers only pay for the amount of wages they access.
EWA can provide workers with much-needed access to their wages before payday. This can help workers avoid late fees, overdraft charges, and other penalties associated with missing a payday.
On the con side, earned wage access can be expensive for employers, may be used as a predatory tool by some employers, and can create an additional financial burden for employees.
What Is Payday Lending?
Payday lending is the provision of short-term loans at high-interest rates. It is typically marketed to people who need quick cash to tide them over until their next paycheck.
Payday lending is regulated in some states, but not all.
The Pros and Cons of Payday Lending
There are pros to payday lending, including the ability to get quick cash when you need it and the flexibility to repay the loan on your next payday. Yet, there are also some cons to payday lending, including the high-interest rates and fees associated with the loan and the potential for late fees if you can’t repay the loan on time.
Choose Between Earned Wage Access vs. Payday Lending
There are a lot of people who are struggling with their finances these days. One option that they have is to choose between earned wage access and payday lending. Both of these options have their own pros and cons, so it is important to choose the one that is right for you.
If you are in need of quick cash, consider all your options before deciding on a method of borrowing.
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