Earnin 2017 Review: Get an Advance on Your Paycheck

Loans, Personal Loans, Personal Loans Reviews

Earnin is an app that lets you draw small amounts of your check before payday.

600x172-ERN-Logo-PrimaryEarnin:

  • Doesn’t charge fees or interest. Users can donate a “tip” of any amount, typically up to $14 per withdrawal.
  • Has a $100 daily withdrawal limit. Its pay period withdrawal limit varies by user but is between $100 and $500.
  • Requires you to enable direct deposit and provide access to your checking account
  • Can be used by hourly, salaried and on-demand employees. It’s not for independent remote workers or those who have multiple jobs.

Learn more about Earnin and if it’s a good fit for you:

What is Earnin?

Is Earnin right for me?

What you should know about Earnin

How Earnin works

What is Earnin?

Earnin is part of a wave of companies that say they provide alternatives to expensive payday loans or racking up high overdraft fees. Companies such as PayActiv and FlexWage offer similar products.

A two-week pay cycle is hard on people who have to budget every penny, says Ram Palaniappan, CEO of the California-based Earnin. “If they worked today, they should have access to their money today.”

The startup, founded in 2013, is funded by venture capitalists. Palaniappan says the company is committed to a no-fee business model. Most users leave a tip, he says, but he declined to provide specifics.

Earnin says Starbucks, Instacart and Apple store employees are among the app’s users.

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Is Earnin right for me?

Consumer advocates warn that paying to get your earnings early is not a healthy long-term habit. “It’s cheaper than a payday loan, but I fear that people get into the habit of spending their wages early and end up paying to access their wages on a regular basis,” says Lauren Saunders, associate director at the National Consumer Law Center.

Earnin shouldn’t be used in place of an emergency fund, which can cover common financial shocks and help you avoid turning to apps like Earnin or payday loans. Saving $500 is a good start; long-term, you’ll want to build a fund that covers three to six months’ worth of expenses.

Maintaining a budget that includes money for everyday expenses, savings and something fun can also help you avoid living paycheck to paycheck.

When used occasionally, Earnin is a useful app if you:

  • Are an on-demand worker whose paycheck varies
  • Have a checking account and are paid by direct deposit
  • Don’t want to overdraw your bank account and pay an overdraft fee, typically $34
  • Have already considered other options to get fast cash

Earnin might not be a good solution for you if you:

  • Are paid by reloadable debit card
  • Work from home independently or have multiple employers
  • Regularly spend more than you earn

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What you should know about Earnin

Fees

Earnin doesn’t charge fees and, if you use it sparingly, can be cheaper than overdrawing your account or taking out a payday loan.

But regular tips add up. A $2 tip on a $20 withdrawal due in two weeks is an annual percentage rate of 260%, comparable to the rates that payday lenders charge.

Financial privacy

Earnin requires your checking account information and, if you’re a salaried employee, your geographic location data.

The company says it uses bank account information not only to send you money but also to promote responsible financial behavior and change its withdrawal limits. For example, it scans your bank transactions to identify recurring expenses, such as utility bills. If a bill is due before your next payday, the app will limit your withdrawals to ensure that you have enough money to pay that bill.

Earnin can’t track nonrecurring expenses, though, so you’ll have to budget for costs such as doctor’s office copays with a reduced paycheck.

The company says it stores information in an encrypted form and won’t debit your account for more than you authorize. But you should still think carefully before providing sensitive information to a relatively unknown startup.

Extra features

The app has an optional overdraft avoidance feature called Balance Shield. If you opt in, Earnin will send an amount up to $100 to your bank account every time your balance drops below $100. This will count toward your daily and pay period limits.

The feature provides a financial cushion if your account is in danger of being overdrawn, and it’s cheaper than paying an overdraft fee. But unlike the rest of the app, it’s not free. You can use it once at no charge, but recurring use requires a fee of at least $1.50.

A quarter of all users have enabled Balance Shield, the company says.

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How Earnin works

  1. Create a profile on the app and give it access to your checking account. Anyone can download Earnin, but to use it, you must receive your paycheck via direct deposit.
  2. Earnin tracks the hours you work. It does this differently depending on your job.
    • Hourly workers: Upload photos of your daily timesheet or connect the app with your company’s online timesheet system
    • Salaried workers: The app uses location tracking on your phone to verify that you went to work
    • On-demand workers: Upload photos of your task receipts, such as a Postmates delivery confirmation or a Grubhub order. Earnin automatically uploads Uber ride receipts.

    You can access money only once you’ve earned it.

  3. When you request money, Earnin verifies your hours worked. The company says this takes about 10 minutes if you submit through the app.
  4. You will receive the money the next business day if you request on a weekday, and on the second business day if you request over the weekend. There’s an option to get the money immediately, but only if your bank supports it.
  5. You can pay a tip, usually between $0 and $14, which Earnin deducts from your paycheck on payday along with the money you had withdrawn.

Earnin has two withdrawal limits. The daily limit is $100 for all users. The pay period limit, or the total amount you can withdraw during your pay period, depends on how much you’re paid, any bills due and your financial behavior. For example, the app encourages users to spend less than they make, avoid overdrafts and maintain a positive bank balance. All users start with a limit of $100. If your pay is high enough and your financial behavior meets Earnin’s guidelines, your limit can increase to $500.

 

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