What Is Earned Wage Access?

Waiting for payday can be difficult, especially if an unexpected expense arises before your check. Some employers answer this problem by offering "earned wage access," which allows employees to draw money from their paycheck before payday.

While the ability to access money as you earn it can be a helpful company benefit, it could also make budgeting more difficult in the long term — and you may wind up paying fees to access your earnings.

Here’s what to know about earned wage access, and what to consider before using it.

What is earned wage access?

Earned wage access, or EWA, is a company benefit that allows employees to receive part of their paycheck before payday. Also called on-demand pay, it's frequently an option for hourly workers. Companies like Walmart, Amazon and McDonald’s offer EWA as part of their benefits.

Fees are often a few dollars, and you can receive the money within a day or two — or instantly, for a fee. The amount you receive early is deducted from your upcoming paycheck.

How does earned wage access work?

1. Download the app and link a bank account. Download the EWA app that partners with your employer. The app will require you to link a bank account or debit card where it can deposit the money. The service is usually tied to your employer’s payroll system and may show how much of your paycheck you’ve earned at the end of each payday.

2. Request part of your paycheck. Apps typically limit the amount you can request each day or pay period. Half of your earned wages is a common limit. Your employer may set its own restrictions, too.

3. Agree to the terms, including potential fees. When you request an advance, the app will tell you how much you can receive and when, and disclose any transfer fees. If you agree, the funds are usually deposited into your account within a business day or two. Fees may be subtracted from the advance before you get it or withdrawn with repayment.

4. Get the rest of your paycheck on payday. On your next payday, any amount you received in advance will be deducted from your paycheck.

Earned wage access example

Say you earn $1,000 every two weeks, and Friday is payday. You learn on the Monday before payday that you have to make an unexpected car repair, but you don't have enough savings to cover it. If you’ve earned enough of your paycheck, you can request some of it on Monday to get the car fixed before Friday.

If the app charges an expedited funding fee, it may be taken out of the amount you request, so be sure the advance covers your expense.

How to qualify for an earned wage access service

Earned wage access apps don’t do hard or soft credit checks. Instead, they use payroll information and limits set by your employer to decide how much you can access early.

To use an earned wage access service, you usually need to:

• Work for a company that offers earned wage access as a benefit.

• Download the EWA app that your employer works with.

• Link a bank account or debit card where the funds can be sent.

• Set up direct deposit, in some cases, to either qualify or lower transfer fees.

Popular earned wage access companies

Payactiv, DailyPay and One@Work (formerly Even) are three popular earned wage access companies.

• Payactiv lets employees access up to 50% of their daily net earnings on all work days. Transfers usually take one to three business days, but employees can transfer funds immediately for no fee or a fee of $1.99 or $2.99, depending on how you receive the funds and whether you have direct deposit set up.

• DailyPay decides how much of your earnings you can have deposited when you make a request. Users can get their funds instantly for a fee up to $3.99 or on the next business day for a fee up to $1.99.

• One@Work lets employees access up to 50% of their paycheck and says users can receive funds instantly for a fee. If users don’t want to pay the fee, transfers take one business day, according to the company.

Summary of earned wage access apps

Earned wage access pros and cons

As with any loan, it’s smart to weigh the pros and cons of using an earned wage access app.

Pros

• Fast access to cash. You can usually access part of your paycheck within days after you request it — or instantly, in some cases — making this an option for emergency expenses.

• Low or no fees. If you can wait a day or two for the funds, this is a no-fee option. If you choose an instant transfer, fees are a couple of dollars, which is still much lower than fees on payday and other high-interest loans.

• No credit or income requirements. While other borrowing options like credit cards and personal loans require a credit check and application, EWA services don’t check credit.

Cons

• A smaller paycheck. Taking earnings early means a smaller paycheck on payday. If you have bills set to autopay, your paycheck could come up too short to pay them. 

• A new habit. EWA is a helpful option in an emergency, but consumer advocates say regularly taking money from your paycheck before payday could become an unsustainable habit.

• Possible overdraft fees. Though it’s unlikely that an employer-sponsored EWA service will directly cause an overdraft fee, if your smaller biweekly paycheck isn’t enough to cover other regular expenses, you may unintentionally overdraw your bank account.

Earned wage access vs. cash advance apps

Earned wage access companies and cash advance apps like Dave and Brigit have some crossover. Both provide paycheck advances, but they work a little differently.

Here are the key similarities and differences.

Similarities

No credit check: Neither EWA nor cash advance apps do any kind of credit pull — soft or hard.

Small borrowing amounts: EWA companies let employees borrow a portion of their regular paycheck early. Some have daily borrowing amount caps and the exact advance amount can vary by employer. Cash advance apps frequently cap advances around $200, though some reach $500 or higher.

Fast funding: Both EWA and cash advance apps provide money quickly — usually within a couple of days — though users can often get funds faster for a fee.

» MORE: Cash advance apps that cover you till payday

Differences

Employer involvement: Your employer must partner with an EWA app to provide the benefit. Cash advance apps are downloaded directly from the app store without your employer’s involvement.

Cash access requirements: EWA is tied to your paycheck, which helps the app decide how much you can deposit. Your employer may also have settings in the app that restrict the amount employees can take. With a cash advance app, the amount you can borrow depends on your linked bank account’s cash flow.

Fees: An EWA app will probably have fewer fees than a cash advance app. EWA apps may charge transfer or fast-funding fees. Cash advance apps, on the other hand, almost always charge a fast-funding fee, ask for optional tips, and some require a monthly subscription fee.

» MORE: Cash advance apps vs. payday loans

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