The perk of werk: Companies are using ‘accelerated pay’ to entice new employees As US wages continue to stagnate and unemployment remains low, about 12% of companies -- including Walmart and McDonald’s -- are offering a controversial new perk to attract workers: on-demand access to earned wages. That’s right, no more biweekly pay prison, babayyy! But, while this practice may seem like a benefit, some experts worry it will be overused. Financial freedom-fighter? Or gussied-up payday loan? Accelerated pay companies say they’re not providing payday loans, which charge rates of up to 400% -- but, rather, allowing users to access their money as they earn it. However, there’s one sliiight red flag: In order to instantly tap into wages, users must pay a transaction fee (ding, ding, ding). DailyPay, the leading accelerated pay provider, boasts the lowest transaction fees in the industry at $2.99 per wage pull and says its service helps to reduce turnover, aid in recruitment, and promote financial wellness for employees. Even, another provider, charges a flat monthly fee of $6-$8 and users pull an average of $150 each month -- equating to about a 5% fee for taking out money early. This isn’t your crazy high interest payday loan, but it’s not nothing. A peril dressed in perk’s clothing? A 2017 study found that 78% of American workers live paycheck to paycheck. Experts predict accelerated pay programs could further constrain workers’ finances rather than provide financial freedom. DailyPay reports that companies employing hourly laborers are drawn to their service and that users on average take out $66 once a week. Douglas Boneparth, a certified financial planner and president of Bone Fide Wealth, said that the option to receive pay in real time “tends to… make bad discipline worse.” Allowing lower-income workers access to wages ahead of actual paychecks may lock people into a pattern of subsisting day by day
If you are having "liquidity issues" till your next check' it is wiser to tight the belt than to borrow from your future self. Even if this future is today.