So I see a lot of commercials for banks that advertise you could get your paycheck two days early with them, and my question is: how? It doesn’t make much sense to me. If the company you’re working for is putting the money in your account every other Friday, how is it possible for the bank to give you the money early? How do they know how much you’re paid? And where’s the money they’re giving you early coming from?
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It’s a short term loan. They give you cash, you give them your paycheck, they tack on an extra fee that borders on usury. It’s a scam on poor people. These aren’t usually banks. They’re payday loan companies.
You provide the bank with information regarding your pay (eg. previous paystubs), and the bank pays you the money (minus some fees). In exchange, you agree to pay the bank your paycheck when you get it. It’s basically a short-term loan.
Traditionally, the deposit is initiated several days before the funds are available. Banks that advertise getting your paycheck early just shorten the hold time on your deposit.
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