What is advance pay?
Advance pay refers to a service that enables Australian workers to access a portion of their earned wages before their scheduled payday. This service is designed to assist individuals in meeting short-term financial needs without resorting to traditional loans. By accessing a portion of their earned wages in advance, workers can address immediate expenses, such as unexpected bills or emergencies, without having to wait for their regular payday. The advance pay service provides a convenient and flexible solution to bridge the gap between pay periods and alleviate financial stress.
How does pay advance work?
Pay advance works by allowing individuals to borrow money before their next payday through a service accessed via an app or online portal. The user is given a limit on how much they can borrow each pay cycle, which can be a fixed amount or a percentage of their pay.
The borrowed money is usually deposited into their account immediately. Repayment is automatically deducted from their next paycheck, although some services offer the option to spread repayments across multiple pay cycles. Instead of interest, a fee is charged for each use of the service, typically around 5% of the advance amount.
Examples of pay advance providers in Australia include BeforePay, CommBank AdvancePay, MyPayNow, and Wagepay.
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