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Payday loans are a problem for many reasons. For instance, a study by the Consumer Financial Protection Bureau showed that most payday loan borrowers end up paying more in fees than they originally borrowed. You might borrow $375 to get your car fixed so you can get to work. But you could wind up paying more than double that by the time you get the loan paid back.
Of course, these loans create a dangerous cycle of borrowing to get out of trouble. But then you have to pay them back quickly, making your next payday even tighter. So they keep squeezing your paychecks until you can’t pay your bills and payday loans.
The long-term solution here is to get out of the paycheck-to-paycheck cycle. And believe me, I know that’s harder than it sounds. And while you work towards the goal of building an emergency fund, emergencies can still happen. And they can leave you in immediate need of cash.
That’s exactly what the Earnin app is designed to remedy. If you often find yourself running short of cash before payday, but your credit doesn’t support having credit cards and other traditional financing resources, you can use Earnin to access up to $750 in payroll advances – and even do so free of charge!
What is Earnin?
Earnin (formerly called Activehours) is dedicated to coming up with creative alternatives to payday loans. With this app, you can cash in on your hours worked before payday
According to the Better Business Bureau, Earnin was launched in May 2014, and is based in Palo Alto, California. The fine print on the Earnin website indicates the company is “a financial technology company, not a bank”. It further explains that bank products provided by the service are issued by Evolve Bank & Trust, which is an FDIC member bank.
Earnin has a Better Business Bureau rating of “A” (on a scale of A+ to F) and has been BBB accredited since 2019. Meanwhile, it rates 1.6 out of five stars (“bad”) with Trustpilot, though that rating is based on just 27 reviews.
On the flip side, the mobile app gets a rating of 4.7 out of five stars among 257,000 iOS users on The App Store, and 4.6 out of five stars among 220,000 Android users on Google Play
Unlike a payday loan, which charges exorbitant fees every time you use one, Earnin doesn’t charge any fees. Sounds crazy? It kind of is. But it seems to be working for some people. Here’s how it works, the caveats you should know about, and whether or not it’s right for you.
How Does Earnin Work?
Earnin works on a pay-as-you-can model and is available for Android and iOS devices. You make a withdrawal of up to $100 per day based on the hours you actually worked. Then you pay an (optional) tip on top of the withdrawal–usually just a few bucks or up to about $14. That’s a steal compared to the fees and interest you’ll be charged on a traditional payday loan.
The catch is that you can only use Earnin if you’re a salaried, hourly, or on-demand employee. Freelancers, remote workers, and those with several jobs won’t find what they need here. You also have to receive your paycheck via direct deposit to use Earnin.
Earnin has to be able to track the hours you work. For hourly workers, you can upload a photo of your daily timesheet or connect the app to your company’s online timesheet system. If you’re salaried, you can turn on location tracking so that Earnin can verify you went to work that day. If you’re an on-demand worker, you can upload photos of your task receipts, or the app automatically uploads Uber ride receipts if you’re a driver.
When you need money, Earnin verifies the number of hours you’ve worked for that paycheck. You’ll get the money the next day if you request on a weekday or the second business day if you request on a weekend. A few banks even support immediate fulfillment from Earnin deposits.
On payday, Earnin deducts the amount from your paycheck. You can also add a tip, typically between $0 and $14, to that withdrawal.
What Are the Advance Limits (“Max”)?
Of course, no one is going to let you borrow a whole paycheck’s worth of money before payday. And Earnin has its limits. All users can withdraw up to $100 in a single day. However individual users will have varying per-pay-period limits–between $100 and $750.
Your pay period withdrawal limit depends on your financial behavior, earnings, and other factors. If you use the app well and earn good money, you can borrow more over time.
Payday advances from Earnin will be transferred into your connected bank account in between one and three business days, and at no cost. Funds will be transferred to your bank account via ACH.
But if you need funds more quickly, you can take advantage of the Lightning Speed feature. Funds will arrive in your bank account in a matter of minutes, even on weekends and holidays.
To be eligible for Lightning Speed, you must have an eligible debit card linked to a checking account. Prepaid cards or pay cards are not eligible, nor are transfers into a savings account.
To activate the service, you’ll log into the Earnin app, and then click the Lightning Speed banner on the app homepage.
There are fees for the Lightning Speed feature, and they are based on the amount of the transfer, as follows:
|Transfer Amount||Lightning Speed Fee|
|First Time Fee||$0|
|Up to $24||$1.99|
|$25 – $74||$2.99|
|$75 – $100||$3.99|
|$100.01 – $199.99||$3.99|
|$200 and Above||$4.99|
This is a Visa debit card that enables you to access your earnings and spend funds immediately. Unlike the app itself, you are not subject to the $100 per day/$750 maximum advance amounts. Instead, you can spend up to $1,500 per day, including $300 per day in no-fee cash advances from ATMs.
The amount you can spend on the debit card is ultimately determined by the available funds in your Secured Account in addition to the available earnings you have accrued during that pay period. There are no fees associated with the Earnin Card.
The Secured Account is an FDIC-insured account held through Evolve Bank & Trust that acts as collateral for the Earnin Card spending limits. Funds held in the Secured Account can also be transferred to your linked checking account, subject to the Secured Account withdrawal limits.
To qualify for the Earnin Card, you must receive a minimum of $500 per month in direct deposits, in addition to meeting the other requirements of the Earnin app.
Credit Score Monitoring
You can sign up to get your free Equifax VantageScore 3.0 through Earnin. If you do, you will be required to supply your Social Security number
If you struggle with keeping track of your bank accounts, you might accidentally overdraw them. This can lead to hefty fees. Earnin offers a Balance Shield feature meant to protect you from this. It can link up to your checking account. When the balance dips below $100, it automatically sends you a $100 Earnin loan.
The Balance Shield operates based on your daily and pay period maximum borrowing levels and the available earnings you’ve added by tracking your hours. So if your pay period limit is $100 and you’ve already taken it, you might be out of luck. But this could be a useful feature if you don’t have money in savings or your bank doesn’t offer a similar feature.
Getting Started with Earnin
You can sign up for Earnin on your smartphone through either Google Play or The App Store. There is no cost to sign up for the app. You’ll then need to connect your bank account and add your job information. In doing so, you’ll be giving Earnin access to both your checking account and your payroll information.
Earnin can use one of three methods to track your earnings:
- An electronic or printed timesheet.
- Your employer-provided work email address.
- Automatically, via the Earnin GPS earnings feature if you work from a fixed work location.
It may take the app a day or so for the app to sync the information with your bank and payroll before you can access the funds. For example, Earnin will need to do test deposits into your bank account to verify the connection.
You must also be at least 18 years old, have a US bank account, a valid US cell phone number, and maintain your primary residence in the US. You must also have a consistent direct deposit pay schedule, either weekly, biweekly, semi-monthly, or monthly.
Customer support is available through live chat, 24 hours a day, seven days per week.
Earnin Pros and Cons
- No ongoing interest and fees
- Pay what you think is fair with the tip feature
- Access up to $100 per day, or $750 per pay period.
- Balance Shield feature helps to prevent overdrawing your account and incurring overdraft fees.
- The borrowing limits for Earnin are lower than with payday apps.
- Not available for freelancers, remote workers, or others with irregular pay periods.
- Regular advances are free of charge, but immediate Lightning Speed transfers incur fees.
- “Tips” could add up to a big expense.
- You must grant Earnin access to your checking account and your payroll.
- No phone support.
Earnin is Still Better Than a Payday Loan
Even with these caveats, if you can use Earnin, it’s probably going to work out better than a payday loan. That’s because there are no ongoing interest and fees, and you can pay what you deem reasonable when you take a withdrawal.
The only situation where this may not be true is if you need more than your maximum borrowing limits. In this case, you may need to look into a payday loan or another form of personal loan.
Need More Cash than You Can Get from Earnin?
Do your best to avoid having to rely on a service like this. They’re really a last resort. We want you to get into the habit of only spending what you can afford. Using a service like this is essentially borrowing against your next paycheck. It’s even worse than living paycheck to paycheck. Become financially healthy and break this cycle.
If you’re really in a pinch and you need even more than Earnin can provide, consider a personal loan. One of our favorite partners is Fiona, which aggregates all the available loans that meet your financial requirements and gives you the best offers available.
Dave is a payday loan alternative, but not in the way Earnin is. But it does provide the ability to get an advance of up to $500 in as little as five minutes. Dave comes with no minimum deposits, no overdraft fees, and no hidden fees. However, there is a $1 monthly membership fee, and it gives you access to everything else on the Dave app.
The account comes with a spending account, a debit MasterCard (with cash back rewards), and a high-yield savings account currently paying up to 4.00% APY. And since consumers in need of quick cash often have underlying cash flow challenges, the app also offers users opportunities to increase income through side hustles.
Making waves in the fintech industry, Chime is an online financial app with high-yield savings. Not only can you earn interest on your savings deposits but receive your paycheck up to 2 days early. If you are in a pinch you can take advantage of the SpotMe® feature that provides fee-free overdraft.
Eligible customers may overdraft between $20 and $200, or maybe even more, depending on how much money is regularly directly deposited into your account each month and your account history. You can check your Chime mobile app to determine your limit for the SpotMe® feature.
Related: Dave vs Earnin vs Moneylion
Frequently Asked Questions (FAQ)
Do employers know if you use Earnin?
No. Earnin does not contact your employer at any phase of the process. Though they do monitor your payroll, funds are ultimately withdrawn for repayment from your checking account.
Does using Earnin affect your credit score?
One of the big advantages of using Earnin is that they do not run your credit report as part of the application process. So, if you have less than perfect credit, Earnin can provide you with a way to get early access to your paycheck.
Should You Use Earnin?
If you find yourself frequently running out of money before payday, and you lack the credit standing to access other sources of financing, Earnin could be a solution. It’s much less expensive than payday loans, and it avoids the payday loan merry-go-round that forces you to take successive payday loans.
That doesn’t mean Earnin will eliminate your cash flow problems. Though it can provide extra cash in a pinch, it should not become a go-to source of cash flow. The problem is the same as it is with payday loans: every dollar you borrow today must be repaid on payday. And that holds the potential for even a service like Earnin to become a recurring debt.
The ultimate solution is to develop strategies to either increase income, lower expenses, or both, making services like this unnecessary.