Earnin markets itself as a responsible alternative to traditional payday loans—a way to access the wages you’ve already earned. This paycheck advance tool is a convenient way to access small amounts of money to tide you over until your next payday, without overdraft fees, traditional credit card advances or payday loans.
Earnin also offers additional tools to help you keep track of your bank balances and avoid unexpected overdrafts. With no required fees or interest charges, the free Earnin app is preferable to expensive overdraft fees and payday loans—but like any payday advance, it’s not a long-term solution and is best used as part of a responsible approach to personal finance.
| Pros | Cons |
|---|---|
| Free to download | Low limits |
| No mandatory fees | Limited to certain types of workers |
| No credit check required | Tips can add up |
| Additional tools and resources | Sacrifice some privacy for ease |
The Costs of Traditional Payday Loans
Payday advance services are nothing new. By 2016, nearly 12 million Americans were taking out payday loans to make ends meet.
Traditional payday advances created even bigger financial problems for many borrowers. These consumers often fall into an expensive trap: High fees and interest rates force them to renew their loans over and over—leading to more unaffordable loan expenses. In 2016, consumers spent $9 billion on loan fees alone. Payday loans have come under investigation for predatory practices and should generally be avoided whenever possible.
Happily, alternative pay advance services like the Earnin app evolved. Now, you have more helpful payday advance options.
About the Earnin App
Earnin is a smartphone app (formerly called Activehours) available on iOS and Android devices in the US only. Through its Cash Out product, Earnin allows users to borrow up to $100 at a time. Depending on your situation, you can borrow between $100 and $500 each pay period. You pay the loans back out of your next paycheck. Because you connect the app to your bank account, these debits are made automatically the next time you are paid.
The Earnin app is designed for hourly and salaried workers who are paid regularly. At least 50% of your paycheck must be direct deposited into a checking account. Earnin also accommodates on-demand workers—like rideshare and food delivery drivers and laborers. You must work at a fixed location that Earnin can track via GPS, or you must use an online timekeeping system that Earnin can verify. To use the app, you must allow Earnin to verify the hours you’ve worked during a current pay period.
App Features
In addition to Cash Out, Earnin offers several other tools. All of Earnin’s tools and features are part of the same business model—no fee is required, but you can leave a voluntary tip.
Lightning Speed
Lightning Speed, which requires you to link your debit card to the app, allows you to get money the same day you request it, even weekends and holidays. Without Lightning Speed, you may not receive the money until the next business day. Some banks aren’t compatible with Lightning Speed. Verifying your card to set up Lightning Speed may take up to a day.
Balance Shield
With the Balance Shield feature, you can set up free alerts if your balance falls below a certain amount. If your balance falls below $100, Balance Shield Cash Outs will send up to $100 of your available earned income to your bank account. This feature does not require a fee to use but does require customers to reset the Balance Shield Cash Out request each time.
If you set up a regular tip of at least $1.50, you can set Balance Shield Cash Outs to automatically deposit up to $100 of your available earned income if your balance falls below $100. The amount available for Balance Shield Cash Outs depends on the amounts you’ve already cashed out against your total max.
Health Aid
Many medical bills can be negotiated down, and Earnin can help. Submit images of your medical bills, provide your birthday to verify your account and an Earnin advocate will work to negotiate a lower total payment or better payment terms for you. You’ll receive an update within two business days. For this option, you can pay what you think is fair—there is no required fee, but you can tip up to $100.
Cash Back Rewards
If you enroll your debit card in Earnin’s Cash Back Rewards program, you earn between 1% and 10% at certain stores and restaurants. You have to run your card as credit to receive the rewards, and the app currently only works with Visa, Mastercard and American Express. You can cash out the rewards at any time (there is no minimum) and it will be deposited in your linked checking account immediately.
Benefits of Earnin
Convenience, affordability, a sound reputation and several valuable services that operate on a voluntary tip basis are some features that help set Earnin apart from the competition.
Convenience
Earnin Cash Out helps you meet the demands of your busy life with easy access to the money you’ve already earned. It allows you to avoid exorbitant fees and unreasonable wait times. Download the app, set up your account and you’ll soon be ready to cash out when needed.
Note: Initial account activation can take up to 72 hours. Deposits may take up to two business days.
Security
Earnin requires you to share banking, employer and some personal information. But Earnin employs a 256-bit data encryption to secure your sensitive information. These safeguards are used by many online banking services. Earnin acts in compliance with US laws and regulations for privacy and data security and the company never sells personal data.
Affordability
Traditional payday loans charge expensive fees and interest rates to borrow against your own money. But the Earnin service does not have mandatory fees. You decide what to pay with a voluntary tipping option. Zero is an option. For most services, the maximum tip is $14.
Note: When you tip, be mindful of the amount. A $10 tip on a $100 loan may seem reasonable. But due to the short loan period (typically 14 days), that translates to a 260% annual percentage rate.
Accessibility
The app works with both Android and iOS mobile devices for flexibility. With the Lighting Speed program, the transfer usually completes the same day. Some banks may delay the transfer by one to two business days. The app will debit the amount you borrowed the next time your pay is direct deposited.
Reputation
Earnin has been in business since 2013 and launched under the name Activehours. It was one of the first of its kind in this field. The company rebranded with the new name of Earnin in late 2017. It has a history of working with employees of notable companies, such as Apple, Whole Foods and Starbucks.
Lending Behavior
Earnin CEO Ram Palaniappan is committed to fair business practices with a community-supported approach. He’s promised to avoid the types of predatory financial industry practices that harm consumers and devastate their finances.
Responsible Limits
The most you can cash out in a single day is $100. The borrowing ceiling for a pay cycle is typically $500. Where you fall in that range depends on your banking history with Earnin and your income. These limits may help you be more responsible in your short-term borrowing habits.
Bonus Features
The Earnin app includes additional free programs to help with medical bills and avoid bank overdraft fees. When you link your credit cards to the app, you can even earn cash rebates.
User Reviews
Earnin app users have lots of good things to say about the service. As of December 2019, it had more than 1 million downloads on Google Play. Almost 117K user reviews give the app 4.3 out of 5 stars. Happy borrowers tout the simplicity of use, money savings from overdraft fees and quick cycle increases. The 100.2K reviews on the Apple App Store give the app 4.7 out of 5 stars. Top reviewers rave about how fast it works and what a big difference early access to extra funds makes.
Downsides to the Earnin App
While a payday advance can be a lifesaver in a time of need, there are some potential downsides that any consumer needs to consider before downloading an app like Earnin.
Lack of Privacy
In order to provide its level of service, Earnin requires that you provide sensitive financial and personal data, like your bank account information and employment details. Handing over GPS information or timesheets to prove you worked can feel like an invasion of privacy.
Bank Account Access
Earnin requires access to your bank account to deposit your Cash Out amount. It will determine your Cash Out max based on what it considers your overall financial health, which includes details like how often a positive bank balance is maintained and whether you spend less money than you make. While Earnin provides 256-bit encryption—and promises that it will never withdraw more than you authorize—this level of access may make some consumers a bit leery.
Tipping
The tipping feature is what allows Earnin to operate without other fees or interest rates. Users can leave whatever tip they want, but keep in mind that if you tip a lot or often, it can add up. While it seems reasonable, a 10% or 20% tip may be more “interest” than you’d pay on a personal loan or credit card.
Low Limits
You can only borrow up to $100 in one day and $500 per pay period. Request money on the weekend and you have to wait two business days to receive money. While these low limits can help keep your spending in control, it may not be enough to cover serious emergencies.
Limited Access
There are quite a few limitations to the app’s reach: Freelancers and self-employed workers don’t qualify for this app, for example, and you must receive your paycheck via direct deposit. If you are not able to verify your working hours and your pay, you will not be able to use the app. Some banks and debit cards are not compatible with all of Earnin’s features. As of now, the app is only available in the United States.
Dependence
Like any payroll advance service, repeated use can lead to a dependence on early paycheck withdrawals. You may not be saddled with fees and high interest rates, but regular dependence on advance payments can lead to destructive spending habits in the long run.
Payroll Advance Investigation
The New York Department of Financial Services recently announced that it is leading a multistate investigation into payroll advance companies like Earnin. The investigation is reviewing the costs of these services, including tips and monthly membership fees, to ensure they are not harming consumers or violating state banking laws.
Other Smart Lending Options
Earnin isn’t for everyone. A personal loan may be a better option for those individuals who aren’t able to use Earnin or who need more than the Earnin borrowing cap allows.
Many lenders give you access to funds within one or two days. And making small affordable payments over time allows you to budget responsibly. With a personal loan, you can take care of your immediate needs while starting an emergency fund for future unplanned financial demands.
Using Earnin also doesn’t help your credit score. Consider a personal credit card—that you use responsibly—to build your credit and boost your score.
Earnin App: The Bottom Line
If you’re a salaried or hourly employee, unexpected expenses can be challenging. The inability to pay for these unplanned events then leads to more money problems. Late fees, overdraft costs and penalties make your financial situation even worse. A payday advance can prevent many of these expensive difficulties.
This is where the Earnin app shines. The Cash Out option is quick, and you can borrow against your pending paycheck for with no mandatory fee. With Earnin, you’re working with a reputable company that offers the convenience and flexibility you need to avoid a costly debt cycle.
Just be smart about your usage of this app. Don’t make it a habit. Instead, start building an emergency fund as soon as possible. Only tip when you can afford it, and don’t fall into paying an unreasonable APR when you do.
