Earned wage access apps like EarnIn and DailyPay provide workers with short-term loans between paychecks to cover expenses, repaid on payday. Popularity surged during the pandemic, with transaction volumes tripling from $3.2 billion to $9.5 billion between 2018 and 2020. Proponents argue these apps help manage finances and avoid payday loans, while critics claim they are disguised payday loans with hidden costs, potentially trapping users in a cycle of debt. The average user earns less than $50,000 annually and often faces high inflation. Fees include monthly subscriptions and charges for instant transfers, sometimes resembling payday loan APRs. Some companies, like Amazon and Walmart, integrate these apps into payrolls, offering varied costs. Critics highlight a lack of transparency in fees and potential financial traps, with some users feeling pressured to tip. Regulation is emerging, with some states capping fees and federal bills under consideration. The debate continues on whether these apps are a financial aid or a modern payday loan scheme.
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