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Payday Loan Alternative is a Good Or Risky Thing?

Payday Loan Alternative is a Good Or Risky Thing?

The Instant Pay Smartphone App

The Wall Street Journal has recently wrote some article about a new app for smartphone from Instant Financial that gives the access to the workers to draw their payment the day after they completed the work. If they have an emergency or a bill that needs to be instant payment, they can collect their payment with a few swipes on their phone.

The Instant Financial app, which is free to workers, which sends a notification to users’ smartphones everyday morning at 10 a.m. inform them that how much they earned the previous day and giving them the option that they can deposit half the money on a debit card.

There are other apps that is available on the market they charge the workers a fee to draw cash, often about $3 a transaction. Instant Financial charges their employers to use its service instead.

A Threat to Payday Lenders

If the new technology spreads across the world, the big losers might be payday loan companies that have the specialization in advancing cash at exceptionally very high-interest rates. Payday loans generally charge interest rates of $15 per $100 for the receiving amount, the equivalent of more than 400% yearly. The loans often come with terms and conditions that make repayment very difficult. About 12 million Americans will take out payday loans each year.

The technology is receiving the strongest interest from workers with hourly jobs whose work schedules often vary. Advocates will say that next-day payments will allow the employees to collect the money when they need it, giving them more financial control.

Instant Financial; which says that its app provides the key to what it calls financial wellness, it allows or provides the access to the workers to better manage their bills.

Allowing or provide the access to the employees to access their earned income when they need it, without fees, enhances their financial wellness by giving them access to avoid late fees and expensive alternative lending solutions.

Will this Kill Budgeting?

But is that a good thing? Waiting for payment can be painful if you owe money and creditors are demanding the payment. But what if you don’t have any of those kinds of bills? The normal weekly or bi-weekly payroll system can help some workers to budget their income and deposit it into savings or retirement accounts.

Eventually, it turns on how you manage the money. Turning to payday loans sometimes makes a bad financial situation worse. Payday loans give the cash to borrowers to pay debts urgently, then trap them in a high-interest hell that can be extremely very hard to escape. Often the greatest solution is entering a debt management program through a nonprofit debt-counseling service.

Most financial advisers tells that people should create an emergency fund, typically it has about earnings of six months, to prepare for unexpected bills or job loss. Building a fund that requires some discipline, and the project becomes harder if they have the ability to spend what they earn as soon as they earn it

Some employers who use Instant Pay or any other fast-payment systems say that the ability to access the earnings right away motivates some workers, who are ready to put in long hours and are less inclined to call in sick if they know they will have next-day access to their earnings.

Everyone can handles the money differently, and the next-day some payment technologies will makes the life easier for people who sometimes face financial demands they require cash immediately. Whether using the new apps you’re able to budget your money or they inhibit your ability to save is something you must answer for yourself.

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