How Innovative Banks Are Bringing Their Customers an Early Payday … Time and Time Again
It’s not uncommon to have sudden financial emergencies or due expenses and bills a few days before payday, which can be stressful and nerve-wracking. Fortunately, modern banking and financial institutions understand this.
That is why many modern banks are often eager to implement technologies that make it easier for their customers to access financing when needed, even a few days before their payday.
In this article, we’ll discuss innovations modern banks use to give customers an early payday.
1. Payday loans
Payday loans are a key banking innovation used by almost all modern banks and finance apps to give their customers an early payday. They are short-term, unsecured loans that allow customers to access funds before payday.
These loans can help you get by until your next paycheck comes through, making them an ideal choice for a financial emergency. Payday loans are available from banks and other financial institutions.
When considering available payday loan options, ensure you understand the terms and conditions before signing on the dotted line. Remember that these loans are often for small amounts–$100 to $500–but often have high-interest rates of 400% APR to 1,250%.
As a banking innovation, these loans have received a lot of criticism for predatory lending practices like high-interest rates and jaw-dropping fees–payday lending also has many victims.
However, some borrowers can benefit from payday loans without getting trapped in an impossible debt cycle and financial tsunami. It’s best to be very cautious when taking a payday loan.
2. Early payday app-based solutions/apps
Most banks have hitched their trailers to the self-service, app-banking bandwagon.
Now, many of them have banking apps that offer numerous self-serve banking solutions like early payday. Some banks and startups in the financial services industry have dedicated early payday apps.
Banks use different systems to offer self-serve early payday solutions and apps to give their customers an early payday at a low cost.
For example, some innovative and online-only banks have memberships and online-only programs that offer access to financial facilities like paycheck advances, overdrafts, and other loan facilities based on your paycheck.
Today, banking innovations have developed rapidly and become so accessible that if you have a fixed or steady paycheck, you can use one of the many early payday apps available on the various app stores to access financing before payday.
Banks can offer a paycheck up to 2 days early
Most innovative banks can now offer a paycheck up to two days early. These banks do this through direct deposits, which is part of the Automated Clearing House Network (ACH).
Any non-check ACH deposits on hold for four days can accrue interest or earn you leverage with the bank, including perks like cashback rewards or overdraft fees waived altogether when used in certain situations. It’s also quicker and more convenient since it skips the usual clearing period needed for processing payments.
For example, SoFi bank, an innovative online banking or financial institution, has an easy-to-open online account offering features like 2-day-early-paycheck, zero account fees, cashback and other rewards, and 3.75% APY on direct deposits.
3. On-demand pay
On-demand pay is a great banking innovation many banks and financial institutions use to give customers an early payday and help manage their finances.
The banking technology involves employees getting their money as they earn it even before their payday. The fees for this service are only calculated when used.
Once initiated, the requested funds are transferred to the customer’s account in real-time (depending on the institution, it may take up to 1-2 business days, depending on the type of financial product offered.
Conclusion
Thanks to technology and its adoption in the banking and financial services industries, accessing financing a few days before payday is easier than ever.
When deciding which option to use to access an early payday, it’s important to pay attention to the facility’s cost. Consider the interest rates and other key factors that will help you make an informed financial decision.
This is a submitted article
