A paycheck advance can save the day when you need money for bills or an unexpected expense. You can get an advance from your earnings and pay it back through payroll deductions.
Let’s examine how a paycheck advance, also called a payroll advance, works and your options for getting paid early.
What is a paycheck advance?
A “paycheck advance” is a short-term loan agreement that allows you to access some of your earned wages through your employer before payday. These loans are typically small; in 2022, for instance, the average early paycheck request transaction was $106.¹
Paycheck advances help you bridge the gap between paydays when money is tight and you need cash fast. Early pay requests sound similar to payday loans but are not identical.
A payday loan is a short-term cash advance from a third-party lender. Payday loans are convenient but often come with a high price tag. The annual percentage rate (APR) for payday loans can be 390% or more, according to the Federal Trade Commission (FTC).²
With a payroll advance, you request part of your earnings from your employer and agree to pay it back through payroll deductions. Your employer may charge little or no interest to get your paycheck early, with no credit check required.
How can I get paid before payday?
Your employer should be able to tell you how to get paid early if a payroll advance is an option. Typically, the process works something like this:
- You submit a request for a payroll advance to your employer, which may require filling out a specific form.
- Your employer reviews the request and determines whether to approve it.
- If approved, you receive the advance and agree to repay it through payroll deductions.
How do you get the money from a paycheck advance?
Your employer can decide how you receive the funds from a payroll advance.
For example, if they have your bank’s direct deposit information on file, they may send the advance straight to your bank account. If your job doesn’t offer direct deposit or you’re not enrolled, your company could cut you a paper check to cash or deposit.
Am I eligible for a paycheck advance?
Eligibility for a paycheck advance varies by employer. It can depend on:
- How long you’ve worked for your employer
- Whether you have full-time or part-time status.
Your employer may also impose an initial waiting period. For example, you may need to be employed for at least 90 days before you can request a payday advance.
If you’re not sure how payday advances work at your job or who qualifies, you can check with HR or your payroll department for answers.
How much of my paycheck can I get paid early?
Your employer can decide how much of your earnings are accessible before payday. The amount may be a percentage of your take-home pay or a flat dollar amount.
There may be limits on not just the amount but how often you can take a payroll advance. Your employer may limit you to one advance per quarter, for instance, depending on company policy.
How do you pay back a paycheck advance?
Regarding repayment, federal law allows employers to deduct advances from an employee’s paycheck. But there’s a limit – employers can’t deduct amounts from a single paycheck that would reduce your take-home pay below the federal minimum wage.³
In that case, you may have to agree to multiple payroll deductions to cover the advance amount. State laws may also impact the terms of any payroll advance agreements you establish with your employer.
Benefits of getting a paycheck advance
Getting paid early could be a huge help if you live paycheck to paycheck and are short on cash. Here are some of the main benefits of early paycheck requests.
Help avoid overdraft fees
If you spend more money than you have available in your account, some financial institutions might charge one or more overdraft fees. Those fees can quickly add up; the average overdraft fee was $35 in 2023.⁴
Payroll advances can help you keep your account balance in the black and avoid those costly fees.
Financial flexibility
When the unexpected happens, knowing you can access funds when you need them is reassuring. If you don’t have an emergency fund, a paycheck advance could be the next best thing. It’s not a loan—it’s your own hard-earned money. You’re just getting it a little early, before your actual payday.
Control
Living paycheck to paycheck can be discouraging, and it’s easy to feel like your money is running the show, not you. For example, you might be slipping into credit card debt if you rely on plastic to pay for things between paydays.
Taking a payroll advance can help you regain control and avoid new credit card debt.
Credit score improvement
A paycheck advance may not directly impact your credit since it’s not a loan. However, you could see some credit score improvement indirectly.
How? It’s simple. Payment history counts for the most significant chunk of your FICO credit scores.⁵ Paycheck advances can give you the money you need to pay bills on time and avoid credit score dings.
4 ways to get your paycheck early
How can you get paid early? Here are some of the best ways to get paid sooner.
1. Direct deposit
You can use an early direct deposit feature if your financial institution has one to access your pay sooner. Direct deposit allows you to receive your paycheck electronically. Tell your employer where to send it, and the money is deposited into your account.
When you enroll in direct deposit through Chime, you can receive your direct deposit up to two days early.⁶
2. Use an app
Payday advance apps are another way to get paychecks early, and you can apply right from your mobile phone. It helps to shop around and compare:
- Paycheck advance minimum and maximum amounts
- Fees, if applicable
- Interest, if applicable
- Funding speed
Paycheck cash advance apps can transfer funds to your bank account instantly or within a few business days. However, instant transfers may require a fee.
3. Talk to your employer
The simplest way to get paid early is to ask your employer if a payroll advance is a possibility.
Even if there’s no formal policy in place governing early paycheck requests, your employer may be willing to help you out if you’re going through a temporary financial hardship.
4. Stay updated on the latest options
New financial products are introduced constantly, and it helps to know what options you have when you need a short-term loan.
Short-term loans can serve different needs. For example, you might seek out a paycheck advance to cover an emergency car repair. But if you just need some cash to cover an online purchase, you might consider a Buy Now, Pay Later arrangement instead.
With any short-term loan, read the fine print. Know how much you’re borrowing and how much you’ll repay if the loan includes interest and fees. Also, consider any personal loan requirements you’ll need to meet concerning your credit scores or income.
Make your wages work for you
When you have urgent bills to pay or want to take advantage of a deal on something like cheap flights, having the option to take an advance on part of your paycheck can make a big difference. Learn more about how the future of wages is flexible.