Tag: Payday

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Consumer Watchdog, Pay Down My Debt, Personal Loans

Should You Avoid LendUp? A Review of Its Loans

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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Updated October 25, 2017
Update: On Sept. 27, 2016, the Consumer Financial Protection Bureau ordered LendUP to pay more than $3.6 million in fines for allegedly misleading customers about its online lending service. Read the full CFPB order here

In a nutshell, the CFPB claims LendUP’s parent company, Flurish, Inc., misleadingly advertised its lowest-priced loans. LendUP advertised its loans as available nationwide, yet the most attractive loans were only available to customers in California, the agency says. 

The CFPB also claims  LendUP failed to accurately market the annual percentage rates offered with its loans and in some cases understated the true APR on its loans. 

What does the CFPB’s order mean for LendUP customers?

The CFPB has ordered the company to pay about $1.83 million in refunds to over 50,000 consumers. Consumers are not required to take any action. The company will contact consumers in the coming months about their refunds, the watchdog says.

In response to the CFPB’s claims posted on its website, LendUP says the transgressions date back to the company’s early days. “When we were a seed-stage startup with limited resources and as few as five employees. In those days we didn’t have a fully built out compliance department. We should have.”

Lendup LendUp is a company offering a better alternative to the typical shady payday loan. Its aim is to disrupt the payday loan system by providing consumers with more affordable loans, more education, and transparency.

This is quite a change from storefront payday lenders, who have confusing policies that often leave customers paying more huge amounts in interest.

LendUp wants to reform the payday loan industry by helping its customers get out of debt and build credit.

However, it could come at a hefty price for consumers. Payday loans are known for outrageous APRs, and while LendUp has more reasonable APRs than typical payday loan companies, it’s still something to be aware of.

Who Should Use LendUp?

Before we get into the details of the loans offered by LendUp, it’s important to address who should avoid its loans and who should consider them.

Payday loans are typically short-term loans to tide you over if you need money in between pay periods. The term can be one week, two weeks, or one month long. That’s a big difference from other personal loans that have terms of 1 to 5 years.

It comes down to your personal situation, and what you’re looking to use the money for.

If you have damaged credit or no credit at all, then payday loans might look like the only solution. LendUp can help you, but it’s important to consider the price.

If you’re simply looking to build credit, there are much better options out there. Taking a payday loan should be one of your last resorts. You can only start to build credit via LendUp when you reach Platinum or Prime status, which requires you to take on multiple loans.

Each time you borrow money from LendUp, you’ll be paying a significant amount in interest. For example, even if you only borrowed $100 for 31 days, you’d still pay $24.40 in interest (287.29% APR), according to their calculator.

For that reason, if you have poor or no credit, it’s better to look into opening a secured credit card, or trying to get approved for a store card. There’s no reason to pay $24 in interest if you don’t have to.

If you have severely damaged credit and are unable to get approved for any other solution, or you’re in dire need of cash to afford necessities like food, then you should consider LendUp over going to a regular payday loan store. LendUp is certainly the better option.

That said, if you’re looking for a long-term loan, or looking for more cash for a big purchase, then LendUp is not the right choice. You should check out the other personal loan lenders we’ve reviewed, such as SoFi*, Payoff*, and Upstart*.

How Does LendUp Work?

LendUp Ladder APRLendUp is a completely new solution to payday loans. It has what it calls the “LendUp ladder,” which is a point-based system. When you show that you’re a reliable customer and can make timely payments, you’re rewarded points, which enable you to climb up the LendUp ladder.

Update: In a consent order issued Sept. 27, 2016 the Consumer Financial Protection Bureau claims LendUP misleadingly advertised its loans as available nationwide. However, the most attractive loans, which customers were told they could earn access to through LendUP’s “Ladder” rewards program, were only available to customers in California. 

You can also earn points by watching LendUp’s educational courses on credit and for taking loans with them.

Climbing up the ladder gives you different statuses. You start at Silver, and from there, you can advance to Gold, Platinum, or Prime status. Each status has better terms, and at Platinum and Prime status, you can report your payments to credit bureaus to build your credit.

LendUp also doesn’t allow rollovers. That means if you’re unable to pay back your loan on time, LendUp will not charge you a fee to extend it, as other payday lenders do.

Instead, it offers free 30-day extensions on loans, so if you’re unable to make a payment, all you have to do is log into your account, and choose the option to extend your loan. LendUp tries to work with its customers as much as possible to ensure they’re getting out of debt, not back into it.

According to its website, LendUp is also the “first and only licensed direct lender with a relationship to the major credit bureaus.” LendUp emphasizes that there’s no middleman involved when customers take a loan, which allows LendUp to maintain its transparency.

LendUp Loan Details

Terms vary based upon the status you have with LendUp and you can get a loan amount of $100 – $1,000 depending on your tier.

Silver starts you off with a minimum loan amount of $100 and a maximum of $250. The terms range from 7 to 31 days. The maximum loan amount offered is $1,000, accessible at Prime.

Screen Shot 2015-03-27 at 5.57.58 PMLendUp provides a helpful calculator on its front page that gives you an idea of what you can expect with different loan amounts and terms.

For example, if you want to borrow $250, the APR range is 209.75% (30 days) to 755.03% (7 days).

According to ResponsibleLending.org, the typical two week payday loan as an annual interest rate ranging from 391% to 521%. LendUp falls within that spectrum.

Unlike payday lenders, LendUp rewards customers for continuing to borrower. LendUp does offer rates as low as 29% to its Prime customers, which is great when comparing against other payday loans. However, we’d prefer you focus on building your credit score and look to establish a line of credit with a credit union or get a personal loan from lender with better terms.

LendUp payday loans are also currently offered in only the following states: Ohio, New Mexico, Washington, Maine, Oklahoma, Louisiana, Florida, Texas, Wyoming, Alabama, Idaho, Indiana, Illinois, Mississippi, Oregon, Kansas, California, Missouri, Tennessee, and Minnesota.

LendUp is working on increasing its presence throughout the United States, but since its a direct lender, its has to comply with individual state laws and policies.

LendUp Application Process

The application process is fairly straightforward. LendUp says it should take 5 minutes or less to fill out the application and you’ll get an instant decision.

LendUp offers standard next day funding, instant funding, and same-day funding (Wells Fargo customers only). It warns that if you take instant or same-day funding, you’ll have to pay a fee to cover the cost.

LendUp offers a no credit check payday loan option. To qualify, you just need an active bank account and proof of income.

It assesses applicants on much more than just their FICO scores, which comes as no surprise. Throughout its site, LendUp makes it clear it wants to lend to those with bad or nonexistent credit. Like other personal loan lenders, LendUp uses its own algorithm consisting of different data points to determine whether or not to extend a loan to an applicant.

The Fine Print

LendUp states it doesn’t have any hidden fees, but as with any payday loan, you need to read the fine print.

First, fees and rates are dependent upon the state you live in, so make sure to review state specific information here.

The only fee that’s mentioned with a dollar value attached is a non-sufficient funds fee. LendUp automatically takes money out of your bank account, and if you don’t have enough money in there to cover it, you’ll get hit with this fee, which can be between $15 and $30.

Additionally, if you want to pay before your due date, you can pay with your debit card, but you’ll incur a fee to cover the cost of the transaction.

Opting to get your money instantly or same-day also comes with a fee.

What happens if you can’t afford to pay and you used your extension? This is a common concern among those already tight on money. On its site, LendUp says to contact them at the first sign of trouble. It’s willing to work with borrowers.

However, if you don’t pay, and you don’t contact LendUp, then there are consequences. LendUp can suspend your LendUp account, send your account to outside collection agencies, take legal action, and report your account delinquent to the credit bureaus.

Commendable, but Still a Payday Loan

LendUp’s mission is a commendable one – it wants to educate its customers and provide them with a better way to get back on their feet. LendUp is certainly an improvement over traditional payday lenders, but at the end of the day, it’s still a payday loan. When taking one, you need to consider the overall costs you might face.

Look into secured lines of credit or store credit cards – don’t look to take a payday loan first. Only take one if you desperately need the cash and you’re in a rough spot. Be aware of exactly what you’re getting yourself into, and make every effort to pay off your loan on time and improve your financial situation.

If you’re interested in looking into a loan with LendUp, use its site map to get specific information related to the state you live in, as loan terms vary depending on state.

*We receive a referral fee if you click on offers with this symbol. This does not impact our rankings or recommendations. You can learn more about how our site is financed here.  

Erin Millard
Erin Millard |

Erin Millard is a writer at MagnifyMoney. You can email Erin at erinm@magnifymoney.com

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Strategies to Save

11 Tips for Budgeting Monthly Bills on a Weekly Paycheck

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

While Chelsea Jackson finished her Early Childhood Education degree at Georgia Gwinnett College in 2016, she took a job as a cashier at a local grocery store. The 23-year-old earned $9.25 an hour and was paid on a weekly basis, bringing in about $250 with each paycheck.

Getting paid on a weekly basis, she says, came with its own set of challenges. She needed to figure out how to save enough from each paycheck to cover bills due later in the month while also meeting her immediate needs (food, gas, etc.) at the same time.

“When you get paid weekly you don’t really have a snapshot of what your true income is because it’s gone so fast,” says Jackson, who now works as a first grade teacher. “It’s such a little amount, you really don’t see how much you make until the end of the month when you add up your paychecks.”

More than 30% of U.S. businesses pay workers on a weekly basis, according to the U.S. Bureau of Labor Statistics. Cashing a paycheck every week might sound like a great deal, but it can actually make budgeting for bills more challenging.

Exacerbating matters is the fact that workers who are paid weekly are already at a financial disadvantage, as they are more likely to earn less than their counterparts who are paid biweekly or monthly. Employees on weekly pay schedules earn an average of $18.62 per hour versus $24.81 (workers paid biweekly) and $28.45 (workers paid monthly), according to the BLS.

There are ways to adjust to a weekly pay schedule and still meet your financial obligations at the same time.

Here are some tips:

Change your bill due dates if you can

If you can, ask whatever entity is sending you a bill each month if you can move your due date to one that’s more convenient for your budgeting purposes.

“You kind of have to have one thing pushed back so it doesn’t hit you all at once,” says Shannon Arthur, 22, who receives a weekly paycheck as the assistant manager for a department store in Suwanee, Ga.

Arthur says her credit card bill comes during the second week on purpose. She called her credit card company to change the bill’s due date to better fit her payment schedule.

Work with your lenders when you can’t meet your due dates

If two bills overlap and there isn’t enough money in the bank for both, workers are left with a hard choice. Arthur found herself in that situation, and she knew she was going to be late paying her phone bill. She found that honesty worked in her favor.

“I just explained to [T-mobile] my situation,” she says. They allowed her to pay $20 of the bill that week, then pay the remainder the following week.

But she stresses making a good-faith effort to pay your bill on time if you’re going to ask for extra time as you’ll likely need to show you have a good payment history or the company may not allow you to pay later.

Save your “extra” check

When you’re paid weekly, you’ll have some months when you’ll receive five paychecks instead of four. “Those months should be used strategically,” says behavioral economist Richard Thaler.

He advises workers to budget based on receiving four paychecks each month and then use the the fifth, or “extra” paycheck to boost or address your financial goals.

“When it comes around, or if, perish the thought, there are outstanding credit card bills, pay them down,” says Thaler.

Chart your cash flow

Know exactly what money you have coming in and how much you have going out each month. Lauren J. Bauer, a financial adviser based in Greensboro, N.C., recommends creating a list of all of your bills. From there, calculate how much you need to withhold from each paycheck in order to cover those bills by their due date.

“It makes it easier than just writing down a total for all your bills and trying to get them paid when you think about it,” says Bauer. She says the chart makes it easy to see what you’ll spend by check, so that you know how much money you’ll have coming in and what you’re able to pay for that week.

Set aside money to cover bills in advance

“If you’re getting paid weekly, you need to develop a discipline to save for things that you pay for on a monthly basis,” says Peter Credon, a New York, N.Y.-based financial planner.

Jackson says she relied on a simple strategy to make sure her bills were paid on time. She strove to save up three months’ worth of expenses. Once her savings fund goal was met, rather than paying her bills with a bit of each paycheck, she used her savings to pay bills as they came. Then, she replenished some of the funds each time she was paid.

This strategy is all about taking back control of your budget.

“If you have enough money [set aside], you can prefund things in many aspects and have control,” Credon says. “You’re controlling your finances and how you spend your money.”

Set aside funds for emergency expenses

No matter how often you’re paid, you should build an emergency fund that holds enough money to cover about three to six months’ worth of your fixed expenses. It can help cover irregular or unexpected bills that don’t line up with your pay schedule, like an emergency dentist visit or a trip to the auto shop.

“The emergency fund helps keep you out of long-term debt,” says Credon. “Focus on building up a little more cash on the side to get yourself through the tougher times. He says you may even want to save a little more if you’re a shift worker and your hours fluctuate.

Keep your spending money in a separate account

An easy self-hack that helps combat overspending is to transfer funds you need to cover your expenses for the month to a designated checking account and restrict yourself to using only those funds each month. Automatically transfer the amount you wish to save to a separate savings account, so you’ll be less likely to spend it.

Putting the extra money in savings can help prevent you from getting used to a larger budget. It stops you from seeing you have more money in your budget for the next week and thinking you can overspend. You take that money out of the equation to keep your spending habits tamed.

Make partial bill payments with every paycheck

If you know the date and amount of an upcoming bill, you can get ready for the payment ahead of time to lessen your financial burden during the week when the bill arrives.

For example, let’s say your rent payment is $700 per month, but you receive only $400 per week. Each week, set aside $175 for your rent and reserve the leftover funds for other expenses.

This way, a large, recurring bill like a mortgage or student loan payment won’t eat up the majority of your paycheck the week the bill becomes due. Plus, you’ll already know you have the money to cover the bill.

Try not to splurge

When you’re paid weekly, you’re paid quite frequently, so it can be easy to feel like your next payday is right around the corner. But you may run out of money faster than you imagine. When Jackson was paid weekly, she was forced to be strict with herself because she wasn’t paid that much at a time.

“There were definitely weeks or months when I would splurge,” says Jackson. “Those six days [till the next paycheck] can feel like a really long time.”

Use apps to track your spending and saving

You can set bill reminders on your banking or budgeting applications to remind you when a bill will be due in the coming week or set alerts to let you know when you’re overspending in a category you’ve budgeted a limit for.

Jackson says she used the budgeting app Mint to reign in her spending on food since she realized she was overspending at the grocery store.

Don’t forget to check your credit report from time to time if you use credit cards or have loans you’re paying off. “If you’re paying your bills on time and promptly, you’re also building your credit score,” says Credon.

Keep your goals in mind

Admittedly, if you’re already struggling to live paycheck-to-paycheck, saving up can be tough, but it’s not impossible.

“Watching a budget isn’t fun because most people want to be able to do what they want when they want to,” adds Credon. He suggests building in some rewards — like getting to go on a date night once a month — to help stay on course. He says to think of longer-term goals to keep you going, like the ability to buy your own place or take a trip for a few weeks overseas.

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at brittney@magnifymoney.com

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Eliminating Fees, Personal Loans

4 Companies That Help You Get Your Paycheck Early

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Financial emergencies have a habit of cropping up at the worst possible time — when you’re stuck in-between paychecks. Perhaps you need $250 for an emergency car repair, but you just paid rent and won’t have the funds until your next payday in two weeks. Normally, you might want to turn to a credit card or a payday loan, racking up onerous fees in the process.

What if you could get a portion of your next paycheck early without paying hefty fees or interest?

That’s the premise behind the following four services. They try to help workers make ends meet without taking on debt by giving them access to the money they earn when they earn it.

Activehours

  • Available if you have direct deposit.
  • Withdraw up to $100 each day and $500 per pay period.
  • No fees or interest.

Activehours What it is: Activehours is an app-based service available on Android and iPhone smartphones. Once you download the app and create an account, you connect your bank account and verify your paycheck schedule. You must have direct deposit set up and linked to a checking account.

How it works: In order to use Activehours, you need to upload your timesheet, either manually or by connecting a time-tracking account to the app (your employer must use one of the eligible timesheet partners in order for this to work). Using this information, Activehours estimates your average take-home hourly rate after taxes and deductions.

As you work, the hours will be automatically shared with Activehours, or you may have to upload your timesheet. You can then cash out a portion of your earned pay before payday.

You can withdraw up to $100 each day. Based on your account balances and Activehours use, the pay-period maximum could increase up to $500. The payment will arrive in your checking account within a few seconds, or within one business day, depending on where you bank.

Activehours doesn’t connect to your employer’s payroll. It connects to whatever bank account you use to collect your pay. The next time your paycheck hits your bank account, Activehours will automatically withdraw what you owe. There aren’t any fees or interest charges for using the service, however Activehours does ask for support in the form of tips.

DailyPay

  • Works with popular ride-share and delivery services.
  • Get paid daily for your fares or deliveries.
  • There’s no interest. You pay a flat fee that is subtracted from the day’s earnings.

Dailypay What it is: DailyPay caters to workers who are employed by ride-share or delivery services, such as Uber, Postmates, Instacart, Fasten, and DoorDash. It can also be used by workers at restaurants that use delivery apps, such as GrubHub, Seamless, or Caviar.

How it works: After signing up for DailyPay, you’ll need to connect a bank account where DailyPay can send you payments. Next, you’ll need to connect your DailyPay account with the system your employer uses to track your hours. DailyPay tracks the activity within the accounts and sends you a single payment with the day’s earnings, minus a fee. Restaurant workers get paid for the previous day’s delivery earnings, minus a fee, from all the connected delivery programs.

About those fees…

Fees are based on how much you ear per day. As a driver or on-demand worker, when you make less than $150 during a day you’ll pay a $0.99 fee. For workers who earn more than $150 in a day, the fee is $1.49. Restaurant workers’ fees vary based on order volume, but are often around $2.49 for each payday. In either case, you’ll need to update your account with each service and redirect the payments to go to DailyPay.

PayActiv

  • Employer must sign up and offer PayActiv as a benefit.
  • You can withdraw up to $500 in earned income before payday.
  • $5 fee for each pay period when you use the service.

Payactive PayActiv is an employer-sponsored program that allows employees to withdraw a portion of their earned wages before payday. While you can’t sign up on your own, you can ask PayActiv to contact your employer about offering the service. There’s no setup or operating costs for employers.

Once your employer offers PayActiv, you sign up and withdraw money as soon as you earn it. You can withdraw up to $500 early during each pay period via an electronic transfer or withdrawal from a PayActiv ATM (available at some employers’ offices).

The early payment comes from PayActiv, but it isn’t a loan and you won’t need to pay interest. Instead, your employer will automatically send PayActiv an equivalent amount from your next paycheck.

There is $5 fee per pay period when you use the service, although some employers cover a portion of the fee, according to Safwan Shah, PayActive’s founder. As a member, you’ll also get free access to bill payment services and savings and budgeting tools.

FlexWage

  • Employer must sign up and offer FlexWage as a benefit.
  • You’ll receive a reloadable debit card tied to an FDIC-insured account where your employer deposits your pay. You can add earned pay to your account before payday.
  • There is a flat fee of $3 to $5 for early transfers.

Flexwage FlexWage is an employer-sponsored program that relies on the use of a payroll debit card and integrates with employers’ payroll systems. If your employer offers FlexWage, you can get your paycheck deposited into an FDIC-insured account with the linked Visa or MasterCard debit card. You can also add earned, but unpaid, wages to your account before payday without paying any fees.

With FlexWage, the employer determines how often you can make early withdrawals and the maximum amount you can withdraw. Unlike PayActiv, FlexWage doesn’t act as a middle-man. Your paycheck advances will come directly from your employer’s account.

Bottom Line

These four companies work slightly differently, but they share the same basic premise: giving you early access to the money you earned, without saddling you with a painful assortment of fees. If you’ve had to rely on borrowing money in the past when funds are tight, these could be a better alternative to credit cards or payday loans.

Louis DeNicola
Louis DeNicola |

Louis DeNicola is a writer at MagnifyMoney. You can email Louis at louis@magnifymoney.com

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