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Banking

A Timeline of the 2008 Financial Crisis

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

The financial crisis of 2008 was one of the worst economic disasters in recent history, and the shockwaves from the global recession it caused are still being felt today. We will outline the key developments in the 2008 financial crisis timeline on a month-by-month basis. The roots of the crisis can be found in banks making too many risky investments, especially in subprime mortgage loans. The big banks packaged risky mortgage loans into investment securities, sold the securities to each other, and then insured the investments with exotic and risky forms of insurance known as credit default swaps (CDS). These interrelated investments tied the banks to each other: If one bank went bankrupt, the problem would infect others and eventually the entire financial system. This is how banks became “too big to fail.”

By the final months of 2007, the U.S. housing market and global credit markets were under a great deal of pressure. The slowing U.S. economy lowered home values, subprime borrowers started defaulting on their loans, pushing the banks to declare huge losses from subprime mortgage investments. This negative feedback loop sparked a major liquidity shortage, as the banks reduced lending to one another because of the spiraling losses.

Interbank lending is the vital circulatory system of the global financial system. In an effort to jump-start interbank lending and ease the liquidity crisis, central banks around the world — including the U.S. Federal Reserve — began cutting interest rates and offering emergency lending for the banking sector.

January 2008 — Central banks cut rates

On Jan. 11, Bank of America announced that it would buy mortgage lending giant Countrywide Financial Corporation (the deal would be completed later in the year). Countrywide was a key subprime mortgage lender, and it was hemorrhaging money as more and more borrowers defaulted on their mortgage loans. Although the purchase looked like a deal at the time, Bank of America wound up losing over $40 billion due to the acquisition.

On Jan. 21, stock markets around experienced the largest losses since Sept. 11, 2001. The next day, the Fed lowers the key federal funds rate by 75 basis points to 3.5%, the biggest decrease in 25 years. Stock markets rebounded momentarily, but by Jan. 30th, the Fed was forced to cut rates again, this time by 50 basis points, to 3.0%.

The federal funds rate is the key benchmark for interest rates throughout the financial system. When the Fed cut rates, it was looking to drive a reduction in market rates for consumers. The hope was that lower rates would spur consumers to take out mortgages and buy homes — helping current homeowners get out of overpriced, failing mortgages rather than default on their loans.

February 2008 — Washington tries emergency stimulus

On Feb. 13, President George W. Bush signed the Economic Stimulus Act of 2008. The law included measures to boost spending by consumers and businesses, in an attempt to avoid a recession.

  • It provided a recovery rebate to individuals who filed a tax return for 2007 or 2008, effectively lowering the federal tax rate. Taxpayers received up to $600 each ($1,200 for married filing jointly taxpayers), plus an additional $300 per dependent child.
  • The law temporarily increased certain business tax write-offs to $250,000 from $125,000 for purchases of depreciable assets, and up to 50% of the cost of certain purchases in 2008.
  • To address the subprime mortgage crisis, the law allowed the Federal Housing Authority (FHA), Freddie Mac and Fannie Mae to buy up larger mortgages from lenders in certain high-cost areas.

Freddie and Fannie are known as government-sponsored enterprises (GSEs), and together with the FHA, they buy mortgages from lenders and package them into securities, which are sold to investors. The hope was that the higher loan limits would ease the mortgage crisis in hot spots where housing had become very overvalued. However, home sales continued to fall and foreclosures continued to rise.

March 2008 — Bear Stearns fails

During the first two weeks of the month, the Fed announces several programs to increase loans to banks and other organizations, with the hope of increasing liquidity (i.e., the flow of money).

Backed by financing from the Federal Reserve, JPMorgan Chase agrees to buy Bear Stearns on March 16. Bear Stearns had been one of the largest global investment banks in the US, but was failing due to its investments in subprime mortgages.

On March 18, the Fed drops the reserve rate to 2.25%.

April to June — The subprime crisis becomes a global crisis

In early April, the International Monetary Fund (IMF) warned that the financial crisis could go beyond the subprime mortgage market. It warns that the overall global losses could be higher than $1 trillion.

Then, at the end of the month, the Fed cut interest rates again, by 25 basis points to 2%. In the meantime, the Fed continued its efforts to improve liquidity by offering more loans to financial institutions and increasing the types of assets the financial institutions can use as collateral for the loans.

On June 19, it was declared that since March, the FBI had arrested 406 people that it alleged were part of mortgage fraud schemes.

July — Banks begin to fail

Federal regulators seized IndyMac Bank, a major mortgage lender, at the beginning of July, making it one of the largest bank failures in U.S. history. Customers waited in long lines, hoping to withdraw their money before the bank failed. The bank reopened after several weeks as IndyMac Federal Bank.

Denmark announced it was the first European Union country to enter recession, as its economy shrunk for two quarters in a row.

On July 13, the Fed increased credit lines to Fannie and Freddie, and authorized the Federal Reserve Bank of New York to lend the GSEs money. It also gave the Treasury department temporary authorization to buy shares of the GSEs.

President Bush signed the Housing and Economic Recovery Act of 2008 to combat the housing crisis. The act revised regulations for the GSEs, increased GSE loan limits, created a temporary tax credit for people who purchased a new principal residences and temporarily authorized the FHA to refinance mortgages for homeowners who were having trouble making payments.

September — Lehman Brothers fails, GSEs nationalized

The federal government took over the GSEs, Fannie Mae and Freddie Mac on Sept. 7 in one of the largest bailouts in U.S. history. The two companies held about half of all mortgage loans in the U.S. at that time, and their stock prices had fallen over 75% each. The fear was that their collapse could have disastrous repercussions for the economy.

On Sept. 11, Lehman Brothers, a major investment bank, reported $4 billion in quarterly losses and disclosed that it was looking for a company to buy the firm. The U.S. Department of the Treasury and private bankers worked together to make a deal that would work. However, events would overtake them:

  • Sept. 15. Lehman Brothers declared Chapter 11 bankruptcy, making for the largest bankruptcy in U.S. history. On the same day, Bank of America announced it would buy failing brokerage giant Merrill Lynch.
  • Sept. 16. The Fed bailed out insurance giant AIG by offering to loan the company up to $85 billion in exchange for nearly 80% of the company’s equity.
  • Sept. 19. U.S. Secretary of the Treasury Henry Paulson announced the Troubled Asset Relief Program (TARP), a $700 billion government bailout for the financial industry.
  • Sept. 25. JPMorgan Chase purchased failing regional bank Washington Mutual.
  • Sept. 29. Citigroup announced plans to purchase Wachovia bank, the House voted down the first draft of TARP and the Dow Jones Industrial Average drops 777.68 points, its largest single-day drop to date.

October — Congress passes TARP

After a long weekend of unrestrained panic and intense negotiations, Congress passed a revised version of TARP and President Bush signed the program into law. TARP gave the government authority to buy “troubled assets” from private companies, in yet another attempt to stabilize the U.S. financial system.

Upstaging Citigroup, Wells Fargo announced a bid to buy Wachovia on Oct. 3. Wells Fargo ends up getting Wachovia in the end, instead of Citigroup.

The government bailout of AIG is restructured on Oct. 8, giving the company access to more funds.

The week of Oct. 6-10 was the worst week ever for the Dow Jones Industrial Average. The crisis spread to the auto industry as auto sales dropped sharply.

Stock markets plunged around the world. Central banks from Britain, Canada, China, the EU, Sweden, Switzerland and the U.S. worked together to further lower interest rates. The Fed cut rates twice in October, to 1.5% on October 8 and then to 1% on October 29. By the end of October, U.S. consumer confidence had fallen to an all-time low.

November — More bailouts, TARP gets to work

The AIG bailout was restructured again on Nov. 10, reducing the loan amount, lowering the interest rate and giving the company more time to repay the money. The Treasury department agreed to purchase an additional $40 billion in AIG stock.

The Treasury department, the Federal Housing Finance Agency (FHFA), the Department of Housing and Urban Development (HUD) and HOPE NOW alliance announced a new loan modification program that could help mortgage holders who wanted to keep their homes.

On Nov. 12, Paulson announced plans to use TARP funds to ease credit markets rather than purchase troubled assets from financial institutions.

The CEOs of the Big Three auto companies, General Motors, Chrysler and Ford flew to Washington, D.C. on Nov. 18 to request TARP funds.

On Nov. 23, the government bailed out Citigroup.

Fannie Mae and Freddie Mac announced they would stop foreclosing on occupied homes from Nov. 26 to Jan. 9, 2009.

On the 25th, the Fed rolled out a plan to keep interest rates low by purchasing government bonds and mortgage-backed securities. Called quantitative easing (QE), the plan continues to this day. The Treasury and the Fed also announce the Term Asset-Backed Securities Loan Facility (TALF), which made an additional $200 billion in loans available to financial institutions with the goal of increasing consumer lending.

December — Recession finally declared

On the first of the month, the National Bureau of Economic Research confirmed that the U.S. was in a recession that had begun a year earlier, in December 2007. On Dec. 5, monthly job reports disclosed that over 500,000 jobs were lost in November — one of the largest declines in 30 years — and employment had decreased by 1.9 million jobs since August.

On Dec. 19, the Treasury department announces it would use TARP funds to bail out General Motors and Chrysler.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Louis DeNicola
Louis DeNicola |

Louis DeNicola is a writer at MagnifyMoney. You can email Louis at [email protected]

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Banking

What Is a Payroll Card?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Who doesn’t like payday? Your employer hands over your wages in the form of a paycheck or directly deposits funds right into your bank account. For more and more workers, however, payday means getting money on a payroll card. Payroll cards are a type of prepaid debit card provided by employers in lieu of a paycheck or a direct deposit.

According to a 2017 report from the Aite Group, a research and advisory firm, an estimated 6.4 million payroll cards will be in use by the end of 2019. The Aite Group estimates that number will increase to 8.4 million by the end of 2022.

Below, we’ll discuss how payroll cards work, identify a few things to watch out for, and answer some frequently asked questions.

How do payroll cards work?

Employees use payroll cards to withdraw their earnings at ATMs and make purchases anywhere that the card network — e.g. Visa or Mastercard — is accepted. Some cards even offer the option to sign up for online bill payments. But employees who are offered these cards may face an array of fees to access their pay, plus other potential pitfalls.

For employers, printing and sending checks can be expensive and cumbersome. Direct deposits are one way for an employer to avoid the costs associated with physical paychecks, but it’s not a viable option for employees who lack bank accounts.

A 2017 survey from the Federal Deposit Insurance Corporation (FDIC) found that approximately 8.4 million households don’t have a bank account at an FDIC-backed institution.

“There are lots of people who are unbanked or underbanked but still have jobs,” says Bruce McClary, vice president of communications for the National Foundation for Credit Counseling. “If they get a paper check, they have to go to a check-cashing company that is likely to charge a very high fee.”

Payroll cards can be a great way for employers to pay unbanked or underbanked employees, giving them access to their money without the expense of visiting a check cashing firm. However, these cards are not always free of fees and complications.

What are the problems with payroll cards?

Before you agree to sign up for a payroll card, make sure you read the terms and conditions closely and understand how the card works, what fees you’ll have to pay and which usage-based fees may apply. Benefits, drawbacks and fees can vary depending on the card provider. Here are a few things to look out for:

There may be fees to access your pay

New consumer protections and disclosures for prepaid cards and payroll cards went into effect on April 1, 2019. The rules include a requirement to provide a clear chart of common fees to users before they sign up for a card. This should give users a clear, simple fee chart to help them comparison shop and understand what fees they may face when using their payroll card.

Taking the E1 Visa® Payroll Card as an example, here are some of the fees that payroll cards might charge:

E1 Visa® Payroll Card Fees

Monthly Maintenance Fee:

$2.95 in months when there is no payroll deposit on the card; no fee in a month when there is a payroll deposit.

ATM Cash Withdrawal MoneyPass Network Fee:

$1.50; Users get one no-charge withdrawal transaction per month

ATM Cash Withdrawal Non-MoneyPass Network Fee:

$2.50

ATM Cash Withdrawal Foreign Fee:

$3.50

ATM Balance Inquiry Fee:

$0.50

ATM Decline Domestic Fee:

$0.50

ATM Decline Foreign Fee:

$3.00

Funds Transfer Fee:

$2.00

Paper Statement Fee:

$2.00 (per monthly paper statement requested)

Lost/Stolen Card Replacement Fee:

$10.00

Express Delivery Fee:

$40.00

Account Closure Fee:

$15.00

Currency Conversion Fee

3% per transaction

Source:  E1 Visa® Payroll Card

Looking more closely at this fee schedule, it’s clear you can avoid some of the fees by being conscious of how you use the card. The monthly maintenance fee is waived in months when there are deposits on the card from your employer(s), and you get one free ATM withdrawal per month. However, besides the single free ATM withdrawal, it’s difficult to avoid paying fees to access your money, and the account closure fee is high and unavoidable.

Not all cards offer the same features

The payroll card your employer offers may not be a great fit with your financial habits or your normal routine. For example, these cards may be part of large ATM networks and may offer free withdrawals from in-network ATMs. However, like with the E1 Visa card above, there may still be a charge for in-network withdrawals. If there aren’t in-network ATMs nearby, you could wind up regularly paying higher out-of-network withdrawal fees.

Some cards offer additional ways to access your money without fees, such as getting cash back when you make a purchase or offering paper checks that are tied to the account.

Another potential drawback is that these accounts may limit how much money you can keep in the account, and how much you can withdraw or transfer each day.

Holds may be placed on your account for certain purchases

Certain transaction types can trigger a payment hold could be put on funds in your account when you’re using your card for purchases. For example, if you use the card at a gas station, additional funds in your account might be put on hold and it could take several days for the transaction to finalize and the funds to be released. This could mean an extra $100 that’s in your account won’t be available for the following week.

It’s not a stepping stone toward a checking or savings account

“In some ways, [a payroll card] could be working to the detriment of some employees because it’s keeping them from seriously considering opening a checking account at a bank or credit union,” says McClary. “The money isn’t working for you.”

Conventional checking accounts lack many of the small fees that can make a payroll card a bad deal. Additionally, conventional banking options include savings accounts with higher interest rates.

If you need to use this type of card, you may have trouble opening a checking or savings account due to a negative bad banking history — perhaps you bounced a few checks or closed an account that had a negative balance. Remember, many financial institutions offer second chance bank accounts, so don’t let a bad payroll card deal prevent you from pursuing a regular banking account. McClary adds that, “there are programs available in every state to help people open a checking or savings account.”

Pros and cons of payroll cards

Pros

  • Quickly and electronically receive your pay, avoid check-cashing fees and keep your money in a secure account rather than having to worry about carrying cash.
  • Many cards offer free bill pay services, which can make it easier and cheaper to pay your bills versus using money orders or cashiers’ checks.
  • You can manage your money online or with a mobile app (if the card company offers one).

Cons

  • Payroll cards charge fees that can be difficult or impossible to avoid.
  • Very often you have no choice over which payroll card the company will offer.
  • The card might have a maximum daily withdrawal or transfer limits.
  • You won’t earn interest on your money and it may be more tempting to spend money when you don’t separate your savings.

FAQ on payroll cards

State laws may require your employer to give you free access to some or all of your wages at least once each pay period if you use a payroll card. Depending on where you live and the program, your card could waive the first ATM-transaction fee or give you an alternative way to access your wages for free, such as a check that’s linked to the account.

No, you do not. Employers must give you at least one alternative to using a payroll card. However, this alternative could be a direct deposit (rather than a paper check), which isn’t especially helpful for unbanked employees.

If you don’t like the company’s card offering and don’t want or can’t get a bank account, you could sign up for an alternative prepaid debit card on your own — check out our top picks. You may then be able to sign up to have your pay directly deposited onto the card you chose rather than one your employer picked.

Some cards may offer this feature, but others do not. Review the terms of your employer’s program to see if this is an option.

Some cards will let you get cash back when making a purchase, which could be a convenient and free way to get cash from your account.

There’s no credit check or requirement to get or use a payroll card.

Some cards come with zero liability coverage from the card networks, like Visa or Mastercard. Even without that level of protection, you’ll have the same protections as you would with a debit card. You won’t be liable for any transactions after you report your card lost or stolen and you’re limited to $50 of liability for charges that already occurred if you report the card lost or stolen within 48 hours.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Louis DeNicola
Louis DeNicola |

Louis DeNicola is a writer at MagnifyMoney. You can email Louis at [email protected]

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Banking Apps

These 8 Apps Can Help You Make It to Your Next Payday

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

paycheck advance apps
iStock

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 your rent and won’t have the funds until your next payday in two weeks. You might want to turn to a credit card or a payday loan, but those could rack up onerous fees.

What if you could get a portion of your next paycheck early without paying hefty fees or interest? Several financial services companies make this a reality by helping workers make ends meet without taking on debt. Others offer short-term, interest-free loans based on a flat membership fee, which may be easier to manage and budget for than using a credit card or paying financing fees to take out and repay a loan.

1. Earnin

  • Available if you are paid via direct deposits into a checking account from an Earnin-supported bank
  • Withdraw up to $100 early per pay period, or up to $500 after continued use of the app
  • No fees or interest — Earnin makes money from voluntary tips

Earnin is an app-based service available on Android and iPhone smartphones. Once you download the app and create an account, you can connect your bank account (if Earnin supports your bank) 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 Earnin, you need to upload your timesheet, either manually, by connecting a time-tracking account to the app or by using the Earnin app’s GPS feature if you have a single workspace. Using this information, Earnin estimates your average take-home hourly rate after taxes and deductions.

Earnin keeps track of the money you earn while you work, and you can withdraw a portion of your unpaid wages before your next payday. At the start, you may only be able to withdraw up to $100 each pay period. But based on your account balances and use, the pay-period maximum could potentially increase up to $500. The payment will arrive in your checking account within one business day, or even a few seconds, depending on where you bank.

Earnin 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, Earnin will automatically withdraw what you owe. There aren’t any fees or interest charges for using the service; however, Earnin does ask for support in the form of tips.

2. Branch

  • Available if you are paid via direct deposits into a checking account
  • Withdraw up to $500 in earned wages per pay period
  • No fee for standard (three-day) withdrawals, but $3.99 per instant withdrawals

Branch gives you access to money that you’ve earned already, but wouldn’t otherwise receive until your next payday. The company also offers more features if multiple employees at the same company use the app, or if your employer signs up. For example, employees can check their shifts using the app and make a request to swap shifts, ask for coverage or quickly pick up someone else’s shift.

How it works: To use the early pay feature, you’ll need to connect a checking account and debit card, and receive direct deposits into the connected account. You can request an advance of up to $500 using the app — the money will be deposited into your account, and then paid back with an automatic withdrawal on your next payday.

You’ll also need to upload images of your work schedule. However, if your employer has also signed up for Branch and you manage your shifts using the app, your schedule may automatically be in the system.

The early payments can take several days, although you may be eligible for same-day payments based on your direct deposit history and whether you generally have money leftover after your paydays or receiving an advance.

A standard withdrawal into your bank account is free and could take up to three days. There is a $3.99 fee if you want to request an instant payment.

3. Dave

  • Available if you’re employed, paid via direct deposit and have a checking account
  • Borrow up to $75 with an interest-free, short-term loan
  • $1 monthly membership fee and a small fee for expedited delivery. Dave also accepts tips

Dave is a membership service that connects to your bank account and will text you if you’re in danger of overdrafting. The service costs $1 per month. Qualified members can borrow up to $75 with an interest-free loan that helps them cover expenses until their next payday.

How it works: Once you’re a member, you’ll need to get approved before you can request an advance. To do this, you’ll need to connect a checking account where your paychecks are directly deposited and have an account history with several consistent paychecks. Your approval may also depend on whether Dave determines whether you’ll have enough money to repay the loan — so if you generally get paid and spend all your money the next day, you might not get approved.

Once you’re able to request a loan, you may be able to borrow up to $75 without paying any interest or fees. The loan can take up to three business days to reach your account. There is also an express funding option which will get the money deposited within eight hours for a “small fee” (though Dave doesn’t specify how much that is in the FAQ). You can also choose to give a tip when you take out an advance, but tipping is optional.

The due date may be your next payday, but some smaller advances will have a due date on the next Friday even if that’s before your next payday. You can repay the loan automatically from your connected checking account, or repay part or all of the advance early if you want.

4. MoneyLion

  • A personal finance platform
  • Borrow up to $250 with an interest-free, short-term loan
  • Free membership option. $29 monthly fee for extra features, but the fee can be offset

MoneyLion is an personal finance platform. Members receive a checking account, investment account and access to free cash advances. You can use the cash advance to help cover expenses until your next payday.

How it works: The basic MoneyLion membership is free, but there’s also a Plus membership available for a $29 monthly fee. However, you can earn $1 cash back by logging into the app each day and swiping through the daily cards, which have advice, tips and alerts. As a result, you can get the Plus membership essentially for free if you’re a daily user.

The free membership allows you to request up to $250 with a 0% APR cash advance. The money will appear in your MoneyLion account in seconds and will be repaid on your next payday.

To qualify for the cash advance, you’ll need to have your paychecks of at least $250 directly deposited into your MoneyLion account. Your cash advance limit will be 10 percent of your direct deposit amount. For example, you’ll need to have at least $2,500 directly deposited each pay period to qualify for the full $250 cash advance.

Plus members have another funding option, a personal loan for up to $500 that’s repaid over 12 months. However, the loan has a 5.99% APR.

5. Brigit

  • Available if you have direct deposit with average amounts over $400
  • Borrow $80 to $250 with an interest-free, short-term loan
  • $9.99 monthly membership fee, which includes free instant transfers

Brigit is another service that connects to your bank account and allows you to take out interest-free loans between paychecks. The amount you can borrow is based on your bank account activity rather than your work schedule.

How it works: You’ll need to connect a checking account that’s been active for at least 60 days, has a positive balance and has at least three recurring direct deposits from the same employer. Brigit says it looks for direct deposits of more than $400 per paycheck and $1,500 per month on average. You’ll also need to have a history of maintaining a positive balance the day of (and day after) your payday.

Once you’re set up, you can request an advance on your next paycheck. The amount will depend on your checking account’s history and can vary from $80 to $250. You can receive one advance at a time, which will automatically be repaid from your bank account on your next payday. However, you are also able to repay the advance early.

There’s a $9.99 monthly membership fee for Brigit, which includes access to the loan along with other features. For example, you can allow Brigit to monitor your account and automatically transfer a loan to help you avoid overdrafting or paying a late fee. Brigit also offers free extensions if you have trouble repaying the loan, and doesn’t charge late fees, instant transfer fees or ask for tips.

6. DailyPay

  • Employer must sign up and offer DailyPay as a benefit
  • Get paid early for the work you’ve done
  • Pay $1.25 or $2.99 per transfer, but employers can choose to cover the expense

DailyPay connects with employers’ payroll systems to give employees early access to money they’ve already earned. Your employer will need to sign up with DailyPay before you can use the service. It’s free for employers and works as an add-on to ADP payroll systems.

How it works: Once your employer signs up, you can create your DailyPay account. As you work, you’ll accrue an “available balance” each workday based on the hours you’ve worked. You can then transfer money that you’ve earned to your bank account, prepaid debit card or a payroll card.

DailyPay charges a fee of $1.25 for every transfer that you make, with the funds being delivered the next business day. If you need your money before tomorrow, you can do an instant transfer that has a fee of $2.99. Employers can choose to pay for part or all of the fee.

7. PayActiv

  • Employer must sign up and offer PayActiv as a benefit
  • You can withdraw the greater of $500 or up to 50% of your earned wages
  • Fees range from $0 to $5 per withdrawal based on your employer

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.

How it works: Once your employer offers PayActiv, you sign up for an account online, with the app, via text or by calling the company. After creating your account, you can start withdrawing money as soon as you earn it rather than waiting for your payday.

You can withdraw up to 50% of your earned income (up to $500 max) during each pay period via an electronic transfer or withdrawal from select ATMs. The amount you withdraw will be deducted from your next paycheck.

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 of money from your next paycheck. PayActiv charges a $5 fee for each withdrawal, but some employers choose to cover part or all of the expenses.

PayActiv also offers a prepaid card where you can have earned wages deposited each day. It’s free to get the card and there’s no fee if you don’t use it. However, there’s a flat weekly $3 fee (if you’re paid weekly) or bi-weekly $5 fee (if you’re paid bi-weekly) during any period when you do use your card.

8. FlexWage

  • Employer must sign up and offer FlexWage as a benefit
  • You’ll receive a reloadable card tied where you can add earned pay to your account before payday
  • Fees vary depending on your employer

FlexWage is another employer-sponsored program that can give employees early access to money they’ve earned. As you work, your earned income accrues and you can then transfer money to a prepaid card.

How it works: With FlexWage, the employer determines how often you can make early withdrawals and the maximum amount you can withdraw. The money will be transferred to a prepaid card and then deducted from your next paycheck. You may have to pay a fee, but it will depend on your employer; FlexWage does not list a potential fee range on its website.

FlexWage also has a special program for restaurants that allows a restaurant to give employees access to their tips, bonuses or commissions at the end of each day. The money can either be added to a prepaid card or transferred to a bank account.

Need more money? You may consider a personal loan

While a cash advance or getting early access to your wages can help when you are in a small pinch, they often cannot cover a larger emergency expense. If you need more money, you might want to take out a personal loan.

Personal loans are often unsecured loans, meaning you’ll qualify based on your creditworthiness. You’ll receive the money, which can sometimes be deposited directly into your bank account the same day that you apply, and then repay the loan over a predetermined period of time. Many personal loans have a fixed interest rate, and you can know exactly how much your monthly payments will be and how much you’ll pay overall before accepting a loan offer.

The downside is that you may wind up paying fees to take out the loan and a lot of interest, especially if you take out a large loan and then spend several years repaying it.

However, if you have poor or no credit, watch out for online lenders that offer high-rate installment loans. These can seem like good options when the monthly payments are affordable, but the fees and interest can result in repaying several times as much as you borrow. You can explore bad credit loan options here.

Company
APR
Terms
Credit Req.
Upgrade

7.99%-35.89%

36 or 60

months

620

Minimum Credit Score

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure.

The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early.

6.95%-35.89%

36 or 60

months

Not Specified

SEE OFFERS Secured

on LendingTree’s secure website

4.99%-16.79%*

with AutoPay

24 to 144*

months

Not specified

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure.

*Your APR may differ based on loan purpose, amount, term, and your credit profile. Rate is quoted with AutoPay discount, which is only available when you select AutoPay prior to loan funding. Rates without AutoPay may be higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice. Payment example: Monthly payments for a $10,000 loan at 4.99% APR with a term of 3 years would result in 36 monthly payments of $299.66.

18.00%-35.99%

24 to 60

months

Not specified

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure.

Not all applicants will qualify for larger loan amounts or most favorable loan terms. Loan approval and actual loan terms depend on your ability to meet our credit standards (including a responsible credit history, sufficient income after monthly expenses, and availability of collateral). Larger loan amounts require a first lien on a motor vehicle no more than ten years old, that meets our value requirements, titled in your name with valid insurance. Maximum annual percentage rate (APR) is 35.99%, subject to state restrictions. APRs are generally higher on loans not secured by a vehicle. The lowest APR shown represents the 10% of loans with the most favorable APR. Active duty military, their spouse or dependents covered under the Military Lending Act may not pledge any vehicle as collateral for a loan. OneMain loan proceeds cannot be used for postsecondary educational expenses as defined by the CFPB’s Regulation Z, such as college, university or vocational expenses; for any business or commercial purpose; to purchase securities; or for gambling or illegal purposes. Borrowers in these states are subject to these minimum loan sizes: Alabama: $2,100. California: $3,000. Georgia: Unless you are a present customer, $3,100 minimum loan amount. Ohio: $2,000. Virginia: $2,600.

Borrowers (other than present customers) in these states are subject to these maximum unsecured loan sizes: Florida: $8,000. Iowa: $8,500. Maine: $7,000. Mississippi: $7,500. North Carolina: $7,500. New York: $20,000. Texas: $8,000. West Virginia: $7,500. An unsecured loan is a loan which does not require you to provide collateral (such as a motor vehicle) to the lender.
SoFi

5.99%-17.67%

24 to 84

months

680

Minimum Credit Score

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure.

Fixed rates from 5.990% APR to 17.67% APR (with AutoPay). Variable rates from 5.60% APR to 14.700% APR (with AutoPay). SoFi rate ranges are current as of August 7, 2019 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 5.60% APR assumes current 1-month LIBOR rate of 2.27% plus 3.08% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

All rates, terms, and figures are subject to change by the lender without notice. For the most up-to-date information, visit the lender's website directly. To check the rates and terms you qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull.

See Consumer Licenses.

SoFi Personal Loans are not available to residents of MS. Minimum loan requirements might be higher than $5,000 in specific states due to legal requirements. Fixed and variable-rate caps may be lower in some states due to legal requirements and may impact your eligibility to qualify for a SoFi loan.

If you lose your job through no fault of your own, you may apply for Unemployment Protection. SoFi will suspend your monthly SoFi loan payments and provide job placement assistance during your forbearance period. Interest will continue to accrue and will be added to your principal balance at the end of each forbearance period, to the extent permitted by applicable law. Benefits are offered in three month increments, and capped at 12 months, in aggregate, over the life of the loan. To be eligible for this assistance you must provide proof that you have applied for and are eligible for unemployment compensation, and you must actively work with our Career Advisory Group to look for new employment. If the loan is co-signed the unemployment protection applies where both the borrower and cosigner lose their job and meet conditions.

Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi's underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

The information in this article is accurate as of the date of publishing.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Louis DeNicola
Louis DeNicola |

Louis DeNicola is a writer at MagnifyMoney. You can email Louis at [email protected]