New data show apps multiply costs and financial insecurity for borrowers – puncturing industry claims

DURHAM, N.C. – The Center for Responsible Lending (CRL) today released a report, “Escalating Debt: The Real Impact of Payday Loan Apps Sold as Earned Wage Advances (EWA),” which shows that people who take out these loans experience steep and mounting costs as well as increasing financial stress due to increased use over time.

This report uses anonymized transactions data from thousands of app users’ bank accounts to track individuals’ borrowing month-by-month over a full year starting from their first loan. The report finds that over the course of a year, payday loan app users on average doubled their borrowing frequency – with rising costs reflecting that – and, over time, they became increasingly likely to borrow from multiple apps at once. These borrowers also paid triple-digit annual interest rates for app-based payday loans that were comparable to rates for storefront payday loans.

“This report shows how payday loan apps trap people in a cycle of reborrowing and debt,” said Christelle Bamona, senior researcher at CRL and co-author of the report. “These loans are exorbitantly priced, often draining low-wage workers of hundreds of dollars in fees annually.”

“The evidence shows these loans pushing people toward dire financial straits rather than tiding them over,” said Lucia Constantine, senior researcher at CRL and co-author of the report. “Borrowers increasingly exhibit signs of financial distress, including escalating use of these loans.”

Key Findings of the Report

  1. Borrowing from payday loan apps escalates over time. On average, users doubled their borrowing frequency within the first year of tracked usage, rising from two to four loans per month.
  2. Simultaneous borrowing across multiple apps increases over time. Most users (53%) borrowed from more than one lender during their first year. The share of payday loan app users who borrowed from multiple apps in a single month more than doubled from 16% in the first month to 38% in month four, and increased to 42% by month twelve.
  3. Heavy users face much higher costs. During the first year of tracked payday loan app usage, heavy users paid $421 in total loan and overdraft fees, almost triple the costs for moderate users and more than six times those of light users.
  4. Payday loan apps come with steep costs. The average APR for observed loans that were repaid in 7 to 14 days was 383%, a rate comparable to a typical storefront payday loan (391%).

Background

While these products are marketed by the industry as “Earned Wage Advances” (or by similar names), the term “payday loan apps” is used throughout this report, given the essential characteristics this form of credit shares with payday loans obtained from physical storefronts.

CRL analyzed anonymized financial transactions data from January 2021 through May 2025 for over 5,000 low- to moderate-income consumers who use SaverLife, a nonprofit dedicated to using technology to improve financial health, and who have also borrowed from at least one of five direct-to-consumer payday loan apps: Brigit, Cleo, Dave, EarnIn, and FloatMe. Following individual borrowers month-by-month for a year, starting from the app user’s first loan, researchers tracked the frequency of loans, fees paid for those loans, overdraft fees paid to banks and credit unions, and the number of concurrent apps that users borrowed from.

The report, “Escalating Debt: The Real Impact of Payday Loan Apps Sold as Earned Wage Advances (EWA),” is linked here and above.

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Press Contact: Alfred King alfred.king@responsiblelending.org