Summary: In a recent study by Overdraft Apps, the rising popularity of cash advance apps has been accompanied by a significant increase in associated costs over the past six months. The research reveals that the average cost of borrowing from the 17 most popular cash advance apps now stands at $19.08, marking a substantial 24% surge in costs compared to April of the same year. This surge is primarily attributed to fee increases implemented by established apps and the emergence of newer, costlier alternatives.
Rosemead, California — November 7 — A new study by Overdraft Apps has revealed that cash advance apps have become far more expensive to consumers over the past six months. The research shows the cost to borrow from the 17 most popular cash advance apps now averages $19.08, which is a whopping 24% jump in costs compared to April of this year.
This uptick stems from fee increases by several widely used apps and the rising popularity of newer, pricier apps. These mobile apps consistently rank among the most downloaded in the finance category, providing instant access to extra cash with no interest and no credit check.
Fees vary widely amongst the apps, with the cost to borrow $100 ranging from $6.00 to $34.99. Varo, Vola, Cleo, and B9 emerge as the low cost champions, with each charging less than $10 in fees to borrow $100.
The average cost of borrowing $50 was $14.07, $200 advances have an average cost of $26.95, and $500 advances average $60.78 in fees and tips.
Mitchel Harad, publisher of Overdraft Apps, underscores the importance of careful research: “As more consumers struggle with higher costs due to inflation and little financial safety net, these apps continue to grow in popularity. With such a wide range of features, fees and advance limits, a bit of research and comparison shopping can lead to significant savings.”
Navigating Cash Advance App Fees
None of the apps in this study charge interest, and most don’t charge late fees. Instead, these apps charge one or more fees:
Express Fees: Most apps can deliver funds in minutes, charging a $3.99 – $11.99 optional fee on a $100 advance for the convenience of instant access. But there is a no cost alternative – most apps will transfer money within a few days with no fee.
Monthly Subscription: Some apps require a subscription to use cash advance features, with rates ranging from $1 to $19.99 per month. Consumers can access more than one advance per month from most apps, which brings down the effective cost of borrowing.
Optional Tips: 8 of the 17 apps encourage users to leave an optional tip when they request a cash advance, frequently with 15% pre-selected. Tips can significantly increase the cost of borrowing, with seven of the apps that ask for tips ranking as the highest cost options. However, each of these apps discloses in its terms of service that tipping does not impact borrowing limits. Consumers can save by contributing a small tip or none at all.
Understanding fee structures can help consumers realize substantial savings. For example, accessing $100 from Dave ExtraCash,TM with a 5% express fee to send funds to an external bank account and 15% optional tip, costs $20. Choosing to instantly access funds via a Dave Spending Account and leaving no tip reduces the cost to just $3 – lower than any other provider. (Dave also charges a $1 monthly subscription fee.)
Cost calculations for this study are based on public pricing information as of October 13, 2023. The analysis assumes one advance per monthly subscription fee, express delivery fee to an external bank account, and the lower of 15% or maximum optional tip for apps that request tips.
For more detailed insights on this cost study and comparisons of cash advance apps, visit https://overdraftapps.com/how-
About Overdraft Apps
Overdraft Apps helps consumers understand strategies and tools they can use to avoid costly overdraft fees and access extra cash when their bank balance is hovering near zero.