According to a recent GOBankingRates survey, nearly half of all Americans are living paycheck to paycheck.
When you’re living paycheck to paycheck, even the slightest error in budget calculations or actual spending can push your bank account into negative numbers. It shouldn’t be surprising, then, that Americans paid a total of $15B in overdraft fees in 2016 alone.
Some people use overdraft services in lieu of payday loans. The superiority of one product over another boils down to how much you borrow or overdraft. While payday loans often charge an effective APY of 400%, overdraft fees can reach $35 per charge, sometimes making the effective APY as high as 17,000% on smaller transactions.
Neither solution is a good one, but the fact remains: Americans have a cashflow problem. While you should absolutely trim your spending and up your savings, most of us will hit a period in our lives when even good financial habits won’t be enough to save us from struggling with bills.
Fortunately, many FinTech companies are swooping to the rescue. With products that meet the financial needs of modern-day worker, these innovative apps could save you from having to use undesirable products—whether they be payday loans or overdraft fees.
Formerly known as ActiveHours, Earnin allows hourly workers to get access to the money they’ve earned before payday hits. All you have to do is log your hours. Then, when you realize you aren’t going to be able to pay a bill or buy groceries without overdrawing your bank account, you can borrow against the hours you’ve already worked at 0% interest.
Let’s say Amber worked has worked 65 hours during this pay period. She earns $10/hour, and will receive her next paycheck on the 16th. The only problem is that her auto insurance is due on the 15th, and she doesn’t have the money to cover it.
Instead of paying a late fee on her insurance or overdrawing her bank account, Earnin allows her to borrow the $90 she needs to get her bill paid on time. On payday, Earnin will automatically take that $90 back.
There is no fee for this service unless you decide you want to tip.
For $1/month, Dave tracks your regular spending and expenses to predict an overdraft. It can also warn you when a specific transaction will take your bank account into the red.
On top of this service, Dave allows you to borrow money at 0% interest until payday—much like Earnin.
If you choose to tip, Dave will plant a tree in sub-Saharan Africa for every percentage point. If you tip 5% of your loan total, Dave will plant 5 trees. If you tip 15%, Dave will plant 15 trees, and so on.
Just be careful not to lose sight of the forest for these trees—while it’s good to do good, tipping a high percentage could land you in a worse place than simply paying the overdraft fee.
Keeping track of which bills are due when can be overwhelming. While Dave works to help you protect against overdraft fees, Even works to set aside money for your bills, and lets you know how much money it’s okay to spend. When you know how much you have to spend, it’s inherently easier to avoid these fees.
These basic services are free, though if you want access to Even Plus, you will have to pay $6/month. Even Plus includes access to Instapay—a feature that allows you to borrow money at zero percent interest in case of unexpected expenses.
If you want to be more hands-on with your budget, alerting yourself to any potential overdrafts, you can check out Tiller’s spreadsheets. With the Tiller Budget Template, you’ll be able to track and log spending and expenses, and access reporting charts which make you more aware of the categories you drop the most money on.
You can set up your budget for whatever time period makes sense for you. Maybe you get paid once per month rather than every two weeks. The template is customizable to help meet your individual needs.
If you want to take a deep-dive on a week-to-week basis, you may want to check out the Weekly Expense Tracker. This is especially helpful for those living paycheck to paycheck, as a matter of a few days could be the difference between getting hit with a fee or making it until your next pay cycle scot free.
The first 30 days of Tiller are free. After that, you pay just $5/month.