--- title: Why You Should Think Twice Before Requesting a Paycheck Advance description: The Consumer Financial Protection Bureau (CFPB) proposed to classify paycheck advances as loans and warns about high fees and interest rates. authors: - name: Pete Grieve role: Lead News Reporter url: https://money.com/author/pete-grieve/ bio: Pete Grieve is a personal finance reporter. In his time at Money, Pete has covered everything from car buying to credit cards to the housing market. education: University of Chicago, BA Political Science at_money_since: 2022 articles: 602 covers: - Career Advice - Banking - Business - Credit - Credit Cards - Debt - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes social: - https://twitter.com/pete_grieve - https://linkedin.com/in/pete-grieve-b5aa02138 - https://www.facebook.com/petegrieve4 editors: - name: Brad Tuttle role: Senior Editor url: https://money.com/author/brad-tuttle/ bio: Brad Tuttle is a former senior editor at Money with over 10 years’ experience covering a vast number of personal finance topics, including careers, cars, travel, budgeting, investing, insurance, credit cards, consumer psychology, real estate, banking, and shopping and deals. education: Columbia University School of Journalism, MS at_money_since: 2014 articles: 366 covers: - Career Advice - Banking - Business - Credit - Credit Cards - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Professional Services - Retirement - Shopping - Taxes - Technology social: - https://twitter.com/bradrtuttle - https://linkedin.com/in/brad-tuttle-834b225 former_staff: true published: '2024-07-18T19:56:59.000Z' modified: '2024-07-18T19:58:52.000Z' section: Career Advice tags: - News word_count: 550 canonical: https://money.com/paycheck-advances-loans-fees-cfpb-warning/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Woman looking at bills.](https://img.money.com/2024/07/News-Paycheck-Advance-Loans.jpg) Paycheck advance programs give workers instant access to their wages, with no need to wait for a bank deposit. But officials warn advances are essentially just loans that come with surprisingly high interest rates — often over 100%. On Thursday, the Consumer Financial Protection Bureau (CFPB) proposed a rule to officially classify paycheck advance products as consumer [loans](https://money.com/loans/), which would have implications related to required disclosures under the Truth in Lending Act. Offered by many employers in partnership with third-party companies like DailyPay, paycheck advances can give workers near-immediate access to the wages they earn, usually by initiating a request online. The advance amount and any fees are then deducted from the worker’s paycheck. ## When you're in need of emergency funds, a Personal Loan can provide financial aid and peace of mind. ### With the help of a loan, you can settle bills, consolidate debt, and even cover any unforeseen expenses. To see if you qualify, click on your state today. [View Rates](https://money.com/pr/w77036b92ea3?ap_referrer=%2Fpaycheck-advances-loans-fees-cfpb-warning%2F) CFPB Director Rohit Chopra said paycheck advance programs are beneficial to employers but not necessarily employees. He said Americans who use these services can easily end up in a cycle of debt. “The CFPB's actions will help workers know what they are getting with these products and prevent race-to-the-bottom business practices,” Chopra said in a [release](https://www.consumerfinance.gov/about-us/newsroom/cfpb-proposes-interpretive-rule-to-ensure-workers-know-the-costs-and-fees-of-paycheck-advance-products/). ## Paycheck advances are loans, CFPB says When paycheck advance services are offered by employers, there's typically a free option and a fee-based option. But the fee is generally required for workers who want to get their funds as quickly as possible. Paycheck advances can be a way for workers to get through an emergency or avoid a late bill payment. The advances can get workers their money much faster than waiting for a paycheck. In some cases, the services advertise "same-day pay." However, the CFPB says that many workers become dependent on these products. The fees average $3.18 per advance, which may seem trivial, but that can add up for people who get advances every week or multiple times per week. “Workers using these employer-sponsored products take out an average of 27 such loans per year,” the release said. That’s based on a study that included data provided by a group of paycheck advance companies that partner with employers. The list includes AnyDay, Branch, DailyPay, Immediate, OrbisPay and Rain and represents nearly half of the market. These companies work with many large employers in the U.S. in industries including retail and restaurants, such as Target and Domino’s. ## Paycheck advances vs. payday loans The CFPB’s action on employer-sponsored paycheck advance programs follows previous efforts to crack down on exploitative [payday loan](https://money.com/what-is-a-payday-loan/) products, which have a reputation for high interest rates and are illegal in more than 20 states, the CFPB said. The typical [APR](https://money.com/what-is-apr/) for an employer paycheck advance program isn't as bad as the typical APR for a payday loan, but it's still much worse than the interest charged on [credit cards](https://money.com/best-credit-cards/) balances, the CFPB said. The typical APR for a 10-day paycheck advance comes out to 109.5% (assuming the average advance amount of $106 and $3.18 of fees). Last year, the [average credit card APR](https://money.com/credit-card-apr-record-high/) was around 23%. If the CFPB's proposed rule goes into effect, paycheck advance lenders will be required to disclose that interest rate for the loan. The CFPB also said it will “not hesitate to take enforcement actions” against paycheck advance companies that break the rules. ## You never know when you might find yourself financially strapped - the good news is you have options. ### A Personal Loan can help you mitigate losses and get back on track. Click here to explore your options! [Get Started](https://money.com/pr/uacbc7851f59?ap_referrer=%2Fpaycheck-advances-loans-fees-cfpb-warning%2F) ![](https://s3.consumersadvocate.org/prd/image/image/39969/medium_0f8b4a5b-9359-433c-b312-2af52339cec6.webp) Personal Loans can help you get back on track [Get Started](https://money.com/pr/w61fc05665c9?ap_referrer=%2Fpaycheck-advances-loans-fees-cfpb-warning%2F) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/paycheck-advances-loans-fees-cfpb-warning/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Career Advice", "item": "https://money.com/career-advice/" }, { "@type": "ListItem", "position": 3, "name": "Salaries and Wages", "item": "https://money.com/salaries-and-wages/" }, { "@type": "ListItem", "position": 4, "name": "Why You Should Think Twice Before Requesting a Paycheck Advance" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/paycheck-advances-loans-fees-cfpb-warning/#webpage", "url": "https://money.com/paycheck-advances-loans-fees-cfpb-warning/", "name": "Why You Should Think Twice Before Requesting a Paycheck Advance", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2024-07-18T19:56:59.000Z", "mainEntity": { "@id": "https://money.com/paycheck-advances-loans-fees-cfpb-warning/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/paycheck-advances-loans-fees-cfpb-warning/#breadcrumb" }, "dateModified": "2024-07-18T19:58:52.000Z" }, { "@type": "NewsArticle", "headline": "Why You Should Think Twice Before Requesting a Paycheck Advance", "articleSection": "Career Advice", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2024/07/News-Paycheck-Advance-Loans.jpg", "width": 2880, "height": 1920, "caption": "News-Paycheck-Advance-Loans" } ], "author": [ { "@type": "Person", "name": "Pete Grieve", "url": "https://money.com/author/pete-grieve/", "@id": "https://money.com/author/pete-grieve/#author", "description": "Pete Grieve is a personal finance reporter. 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