American applications offer payday advances -

© Xeno Mas / Pixabay

  • In the United States, applications offer you a payday advance to end the month without being in the red.

  • According to the

    New York Times

    , they have already been downloaded millions of times.

  • While payday advance companies are banned in many US states, these apps currently benefit from legal uncertainty.

The economy is slowing down, rising unemployment, bankruptcies ... the financial consequences of the Covid crisis are numerous.

And we keep taking the measure.

In the United States, the

Washington Post

reports an increase in shoplifting.

A sign of the seriousness of the situation, the practice does not concern superfluous items but basic necessities such as baby diapers or food.

Faced with this dire economic situation, we are seeing a new trend appear in Americans' smartphones: payday advance apps.

Apps that troubleshoot at the end of the month

They are called

Earnin

,

Dave

,

Rain

or

Brigit

.

They have a cool name and offer an even more enticing service: lend a few dollars while waiting for the next salary.

Convenient for paying an urgent bill or facing an unexpected expense without resorting to a more restrictive loan.

According to the

New York Times

, these applications are already registering millions of downloads.

In some companies, access to this type of application is one of the advantages offered to employees.

Other payday advance applications are completely separate from employers.

Any user can have access to an advance.

The amount will then be taken directly from his account as soon as his salary is paid.

With little or "no cost".

The Dave app on the Play Store (screenshot © 20minutes.fr)

Disguised interests and over-indebtedness

The problem is, these apps are much less harmless than they seem.

As they concern only small sums, the interest seems reduced.

But as the

New York Times points out

, a $ 100 advance five days before payroll with $ 5 in fees equals an annual rate of 365%!

This is the strength of these applications: contracting loans without appearing to be.

While payday advance companies are banned in many US states, these applications currently enjoy legal uncertainty.

Our "Bank" file

With these apps, taking out a loan becomes as easy as posting a photo on Instagram or having a burger delivered.

Despite some limits put in place by the apps, it is not likely to solve the problem of over-indebtedness in the United States.

In the last quarter of 2019, even before the Covid pandemic hit the world, American households exceeded $ 14 trillion in debt for the first time!

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The original article was written by Alice Huot and published on the DNA website.

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