Editorial Review

Earnin App 2019 Review: Get an Advance on Your Paycheck

Earnin's paycheck advance is a cheaper alternative to payday loans, but it shouldn't be used in place of an emergency fund.

At NerdWallet, we strive to help you make financial decisions with confidence. To do this, many or all of the products featured here are from our partners. However, this doesn’t influence our evaluations. Our opinions are our own.

Our Take

The Bottom Line: A paycheck advance app for on-demand or hourly workers that's best used only occasionally.

Earnin

on Earnin's website

on Earnin's website

Min. Credit Score

None

Loan Amount

$100-$500

Pros & Cons

Pros
  • No fees or interest.

  • Fast funding.

  • No credit check required.

Cons
  • Requires sensitive financial information.

  • May lead to poor financial habits.

Full Review

Earnin, formerly called Activehours, is an app that lets you draw small amounts of your earned wages before payday. It's 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 TrueConnect offer similar products, but only through your employer.

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

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

» SIGN UP: Keep your spending on track with NerdWallet. Sign up for free to see a single view of your finances.

Is the Earnin app right for me?

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

  • Are an on-demand worker whose paycheck varies.

  • Are an hourly or salaried employee who uses an electronic timesheet at work, or you work from a fixed location.

  • 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.

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.

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.

Maintaining a budget that includes money for everyday expenses, savings and something fun can also help you avoid living paycheck to paycheck. NerdWallet recommends using the 50/30/20 budget, which divides your money into needs, wants and savings.

What you should know about Earnin

How much Earnin costs

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

Users can donate a “tip” of any amount, 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, to know that you went to work, an electronic timesheet or your geographic location data.

The company says it uses bank account information not only to send you money but also to adjust its withdrawal limits and promote responsible financial behavior. For example, it scans your bank transactions to identify when recurring bills are due and when payday is, and may limit the amount you can withdraw if you have a bill coming due before payday.

The company says it stores information in an encrypted form and won't debit your account for more than you authorize. Earnin can't track nonrecurring expenses, though, so you'll have to budget for costs such as doctor's office copays.

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 when your balance drops below $100. The amount sent will count toward your daily and pay period limits. The feature provides a cushion if your account is in danger of being overdrawn.

Balance Shield is free for one-time usage. When setting up the feature, Earnin invites you to pay a tip when it's triggered. If you don't set a tip, Balance Shield will protect you only one time. Recurring use of Balance Shield requires a fee of at least $1.50.

Alternatively, you can sign up for Balance Shield Alerts, which sends push notifications when your balance falls below a specific amount.

Payroll advance investigation

In August 2019, the New York Department of Financial Services announced an investigation into the payroll advance industry, of which Earnin is a part. Banking regulators in 11 states and Puerto Rico are looking into whether payroll advance companies are charging illegal interest rates disguised as tips or membership fees, a violation of state consumer protection laws.

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.

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

4. When you request money, Earnin verifies your hours worked. The company says this takes about 10 minutes if you submit through the app.

5. 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.

6. 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.

on Earnin's website

Personal Loans Rating Methodology

NerdWallet's ratings for personal loans award points to lenders that offer consumer-friendly features, including: soft credit checks, no fees, transparency of loan rates and terms, flexible payment options, accessible customer service, reporting of payments to credit bureaus, and financial education. We also consider the number of complaints filed with agencies like the Consumer Financial Protection Bureau. This methodology applies only to lenders that cap interest rates at 36%, the maximum rate financial experts and consumer advocates agree is the acceptable limit for a loan to be affordable. NerdWallet does not receive compensation of any sort for our reviews. Read our editorial guidelines.