For many Americans, payday doesn’t come quickly enough to pay for necessities like gas, groceries, or medicine. When you need just a little bit of cash but you won’t get paid for a few days, you might be tempted to take out a cash advance or early payday loan. The problem is that these financial solutions are often offered by predatory lenders, so they may cost you more in the long run.
Enter Dave Banking. This breakthrough user-friendly fintech solution offers cash advances of up to $75 through enrollment in interest-free loans. Let’s break down everything you need to know about Dave Banking and explore whether it is a good financial tool for your needs.
What Is Dave Banking?
Dave Banking, also just called Dave or Dave App, is a fintech or financial technology organization that primarily operates the above-mentioned Dave mobile app/desktop platform. In a nutshell, this recent startup offers cash advances for users’ paychecks so they can cover immediate and necessary expenses, like groceries or gas for one’s car.
These advances can be used to pay rent, pay for utilities, and more without incurring pesky charges or hidden fees. They don’t come with minimum balance fees. Dave Banking members can use the extra money quickly since it’s available via direct deposit.
It’s best used as an emergency expense app and is similar to other services like Moneypass and Levelcredit. But eligibility requirements are minimal (you just need to have a primary or side job with regular deposits).
Unlike predatory payday lenders or cash advance providers, Dave charges monthly subscription fees and accepts tips for its services. It alerts users that their checking account balances are getting low, then offers paycheck advances to cover necessary purchases. Dave Banking guarantees paycheck loans of up to $75 for qualified users.
However, the Dave app also offers ancillary services. For example, Dave lets you link your checking account with the app, then tracks your expenses. It will offer text warnings when you get close to running out of money. Users can also take advantage of the built-in budgeting feature, which helps to predict future expenses and gain greater control over your finances.
Who Owns Dave Banking?
Dave Banking is owned by the billionaire Mark Cuban. The Dave company was originally launched in 2016 as a basic personal finance tool. The Dave Banking app already has many millions of users and is listed on the public stock exchange.
Is There a Fee for Using Dave Banking?
Yes. Dave Banking charges a $1 fee for using its services. In addition, the app allows you to make tips when able as a way of expressing your appreciation for the application. But these tips are not necessary.
When you get a paycheck advanced loan of $75 from Dave, you don’t have to worry about interest. So, for example, if you use Dave to get $75 to pay for groceries a few days before payday, you’ll only need to pay Dave back $75.
In this way, the app mimics the loaning and borrowing system used by friends (which ties into its friendly marketing name).
Can You Use Dave Banking on Desktop?
Yes, though you need to download the application rather than visit a website. The application is available for Windows 10 and above users. The desktop application looks very similar to the mobile app, so it’s easy to navigate through both interfaces.
Can Dave Banking Help You Build Credit?
It’s unclear. Dave Banking doesn’t do a credit check when offering $75 interest-free loans. However, users do have to pay back the $75 loans after taking them out. This information may be reported to each of the three major credit bureaus (Experian, TransUnion, and Equifax), but it’s not certain.
If you want to build credit reliably and quickly, your best bet is to take out a secured or credit-building credit card. Then use the credit card consistently and pay down the credit balance every week or so.
Dave Banking: The Pros
Dave Banking has lots of positive points that make it a go-to pick for folks hard on cash or leery of traditional payday loans.
Dave Banking’s Budgeting Tool
Firstly, Dave offers more than just interest-free cash advances. It also offers intuitive budgeting tools that link straight to your checking account. This is an invaluable way to learn more about budgeting, plan for daily expenses, and end up with $0 in your checking account less frequently in the future. The financial tools can also be used to plan direct deposit funds and more.
The automatic budgeting tool does look at your financial records and information. But according to Dave, this information is all accessed in “read-only” mode, so there’s no chance of fraudulent activity or identity theft. All in all, this simple planning tool is the perfect way to gain more insights and benefit from predictive alerts at the same time.
Dave Banking Has Overdraft Protection
When you sign up for Dave Banking, you’ll receive a Visa debit card and get a cash management account. The account has no overdraft fees whatsoever, plus no required minimum deposit to open the account.
Plus, the entire point of the Dave app is to protect you from overdraft fees. The app sends you text alerts when your checking account is near zero, so you won’t accidentally overdraw and end up owing the bank more money after the fact.
Further, the account can be used as fee-free ATMs around the country. This account is a great financial companion/banking buddy and meeting the eligibility criteria is achievable for most.
Cash Advances that Don’t Affect Your Credit Score
Perhaps most importantly, Dave allows you access to cash advances without affecting your credit score (albeit either positively or negatively). Thus, you don’t have to worry about your credit dipping even further when taking out an interest-free cash advance from Dave.
Dave Banking: The Cons
That all said, there are some potential downsides to keep in mind when considering Dave Banking.
Dave Banking Has Instant Transfer Fees
For example, Dave does charge instant transfer fees if you need your cash advance within the hour. This is only $3, though, and it’s a minor enough downside that it shouldn’t stop you from using Dave if you need cash fast.
Are Cash Advances a Good Idea?
On the other hand, many financial advisors worry that taking out cash advances, in general, is bad practice. When you take out a cash advance, it means you don’t have enough money in your bank account to hold you over until your next payday.
This isn’t a good long-term strategy for financial wellness. If you find yourself needing a cash advance regularly, you should stop using Dave and instead contact a budgetary advisor or take up other budgeting strategies.
Smart budgeting and financial planning are crucial for financial health. For example, you should make fewer purchases of expensive items, take out fewer lines of credit, or eliminate your current debts as best as you can. Cash advances are emergency tools that should not be used regularly, especially for nonessentials.
What’s the Bottom Line?
At the end of the day, Dave Banking is a valuable financial solution if your finances are in a pinch and you really need cash fast. Dave may allow you to get a cash advance quickly and easily without having to worry about interest, credit score deductions, and other downsides. Still, it’s wise to come up with a long-term budget solution so you don’t need to rely on Dave regularly, if at all.
This goes double if you need to purchase furniture for your home. Instead of taking out a cash advance, consider leasing your necessary furniture with Becca’s Home. Becca’s Home allows you to lease the furniture you want from our extensive selection and pay off the furniture’s price in affordable monthly installments. You don’t need a high credit score and we don’t use credit for our lease agreements. Contact us today for more information.
Sources:
What is a cash advance and how do they work? | CNBC
What Are Overdraft Fees and How Much Do They Cost? | Experian
