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Beware of Earned Wage Access


If you have ever taken out a payday loan in person, you would choose almost any other way of borrowing money, if it were available to you.  Anything is better than taking a long bus ride when you are exhausted after work and then walking to a poorly lit strip mall with bright neon signs, only to hand over your entire paycheck and be just as broke as you were this time last pay period.  The new generation of financial products that serve the most vulnerable borrowers are just as bad; the only difference is that you can access them on your smartphone from the comfort of your apartment, where the sound of your next door neighbors arguing, the constant thumping of your upstairs neighbors rehearsing a dance routine (it is the only thing you can think of that would make so much noise) and the smell of your across the hall neighbors’ weed, rather than taking that long bus ride in the South Florida heat.  The alternatives to payday loans advertise themselves as being much safer, but the fact remains that, when you need money quickly and your credit score is not high enough to qualify for conventional loans, all of your options have a shady side.  Earned wage access (EWA) is only the most recent wolf in sheep’s clothing to appear on the scene.  A Plantation debt lawyer can help you break the cycle of risky, subprime borrowing.

Is Your Boss a Payday Lender?

At best, earned wage access (EWA) is when your employer pays you part of your paycheck in advance; small business owners have been doing this on an informal basis for decades.  The difference is that, now, an online system keeps track of how much your employer has paid you in advance, and then on payday, it directly deposits the rest onto your payment card or into your bank account.  Some major employers such as Walmart, Target, McDonald’s, Dollar Tree, Uber, and Hilton have EWA systems.  You might also recognize these as companies that, despite being worth boatloads of money, barely pay their employees a living wage.

Employers insist that this is not a payday loan, because EWA does not charge interest.  You pay different fees to receive the money more quickly, but EWA providers insist that this is no different from PayPal charging a fee to transfer money into your digital wallet more quickly.

Where EWA really gets shady is the third-party EWA services.  Instead of getting the money you have already earned during the pay period before the pay period officially closes, the system predicts your earnings based on your last paychecks.  It is possible to borrow money that you have not yet earned, which truly is payday lending in all but name.  Worst of all, there is little transparency about the fees that EWA services charge.

Work With a Debt Lawyer About Relief From the Tyranny of a Thousand Small Cash Advances

A South Florida debt lawyer can help you address your underlying debt problems so that you don’t have to rely on risky financial products like EWA.  Contact Nowack & Olson, PLLC in Plantation, Florida to discuss your case.



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