There's no question that, for some low-wage workers, it can be finanically difficult or impossible to wait for pay day. So even if pay day loans are a bad thing for consumers, the demand for them is created by a very real problem. So, in Is ActiveHours A True Payday Alternative Or Just Another Too-Good-To-Be-True Letdown?, Ashlee Kieler at the Consumerist asks whether there's a better, more consumer-friendly alternative. Here's an excerpt:
We’re largely a society built on convenience: fast food, one-stop shops and other we-need-it-now services. Unfortunately, that need for timeliness seeped in to the financial system in the way of quick-fix payday loans, which can provide the convenience of a quick, low-value loan but which often result in a revolving cycle of high-interest debt. Now a new lending product aims to take the predatory stigma out of short-term loans, but, like many payday alternatives of the past, a closer look reveals reason for concern. ActiveHours, a new startup, takes a different approach than typical payday alternatives, like RISE Credit, that simply extend loan repayment time. The service purports to allow hourly employees the ability to collect their wages the day they worked, rather than waiting for their paycheck to arrive. When payday does roll around, ActiveHours users, who have given the program access to their bank account, will have the funds they were fronted deducted in a lump sum. So far, that sounds a lot like a typical payday loan: taking an advance on your paycheck, repaying it when payday comes. What ActiveHours claims sets it apart from others is the idea that it doesn’t charge a fee. Instead, the company asks users to give a voluntary monetary tip as thanks to the service. On the surface ActiveHours sounds significantly better than traditional short-term, high-risk payday loans that have been known to leave consumers in a revolving door of debt by charging three-digit annual percentage rates and tacking on exorbitant fees. But some consumer advocates warn that there are likely more similarities between ActiveHours and payday loans than there are differences.