Is the Earnin App Legit?

FT Contributor  | 

Earnin is a personal finance app that offers convenient and fast advance payday loans that successfully compete with payday loan retail stores. In the past, the Earnin app was called Activehours because it allows you to clock the hours you worked for the day and claim your pay instead of waiting for payday.

Getting paid every two weeks is hard on consumers who face unexpected bills or who have high living expenses. The Earnin app is a way for workers to mitigate financial emergencies without incurring the high fees associated with most payday loans or personal loans.

While this mobile app seems to be an easy way to cash in on your work hours, it does come with its drawbacks. Review the information below to learn how Earnin works so you can decide if it’s right for your financial situation.

Pros and Cons

The Earnin app offers an easy and quick way to get an advance on your paycheck. However, app users have reported both pros and cons to borrowing money from Earnin.

Pros Cons
  • No fees: Earnin doesn’t charge its users fees but they may provide optional “tips” on their loan amount at their own discretion and up to $14 per transaction.
  • Advances are small: When compared to personal loan amounts, payday advances are generally small and Earnin only allows you to claim up to $100 per day.
  • Available on both operating systems: Earnin is available for both the iOS and Android operating systems.
  • Bad financial habits: When you begin applying for payday advances, it can be hard to catch back up financially, which costs you more money in the long run.
  • No long application process: You can register with Earnin right in the app and don’t need to have a long credit history or meet other qualifications.
  • The app tracks you: Depending on how you allow the Earnin app to confirm your working hours, it may track your location or gain access to your employer’s timesheet software.
  • Overdraft avoidance with BalanceShield: When you sign up, you’re offered a free one-time use of BalanceShield, an app that helps you avoid overdrafts on your bank account.
  • Freelancers don’t qualify: You must be a salaried, hourly, or on-demand worker who can easily track working hours to use the Earnin app.

Earnin Review

Before downloading the Earnin app, learn more about how the app works and determine if you’re the ideal borrower.

How Does the Earnin App Work?

To qualify for your first advance payday loan through the Earnin app, download the app that corresponds to your smartphone’s operating system. Next, you must:

  1. Create a profile and log in to the Earnin app.
  2. Enter your bank account information, including your account and routing numbers.
  3. Set up the method that’s most convenient to track your hours. You may choose to allow the app to track your location, upload photos of your daily time sheets, or upload receipts showing you completed on-demand work, such as Grubhub delivery.
  4. Request money within the app after your hours are logged successfully, up to $100 per day.
  5. Allow Earnin to verify your request, which usually takes about 10 minutes.
  6. Receive money directly deposited into your bank account the next business day.
  7. Enter a tip for the service, from $0 to $14, which is taken from your payday advance.
  8. Be prepared for your loan amount to be deducted from your bank account on payday.

In some cases, you may be eligible for a payday advance higher than $100. Your specific limit depends on your hourly wage and the number of hours you work.

Who Is the Earnin App for?

The Earnin app doesn’t have a set annual percentage rate (APR) or loan amount like a personal loan. It’s best for workers who have financial emergencies they don’t have the money to cover. It’s important that workers don’t make it a habit to continue applying for payday advances through Earnin or they may never become financially independent.

Since Earnin only verifies employment and hours worked and doesn’t look into your debt-to-income ratio, it’s best for consumers who won’t qualify for loans. Workers who need to increase their credit score but want cash fast may also benefit from using the Earnin app.

Does Earnin Contact Your Employer?

As an employee, you choose how Earnin tracks your working hours. If you’re a salaried employee, you must turn on location tracking so the app knows you’re at work. If you’re paid hourly at your job, you can also use location tracking or you may choose to upload photos of your timesheet. Alternatively, you may provide the Earnin app with access to your employer’s electronic timesheet to verify your hours.

If you’re an Uber driver, your ride receipts are automatically uploaded to your Earnin account. However, if you work for another on-demand company, such as Postmates, you’re responsible for uploading photos of your task receipts to the app.

Features

In addition to the BalanceShield app, your Earnin account also provides access to an app called Health Aid. The app assists users in negotiating medical expenses and creating affordable payment plans to address medical debt. Users decide how much to pay for the app’s service and aren’t required to pay a set fee.

How to Set Up an Earnin Account

As a lender, Earnin is required to abide by the Truth in Lending Act (TILA). This legislation makes it mandatory for the company to disclose any fees or penalties to the consumer before engaging in lending activities.

When you download the Earnin app, you can’t apply for a payday advance until you’ve linked your bank account and provided the app with access to track your work hours. While the loan process is easy and doesn’t include high interest rates usually associated with payday advance loans, it’s important to not become reliant on Earnin as a way to pay your bills.

The “tips” can add up, making these simple payday loans detrimental to your financial stability. Before deciding to use the Earnin app for fast cash, review the terms and conditions of the payday advance loan and make sure it’s right for you.


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