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Pay-as-You-Earn Cancels Out the Need for Payday Loans Finds Aite-Novarica Group

Millions of American workers are caught in the vicious cycle of debt because of reliance on payday loans and paying costly overdraft fees to pay bills on time and make ends meet. However, according to new research from the Aite-Novarica Group, having access to your pay as you earn it can eliminate such financial crippling options to survive paycheck to paycheck for an overwhelming majority of people who are stuck using these predatory financial services.

The research confirms that DailyPay and its proprietary approach to on-demand-pay (sometimes known as earned wage access), offering employees 100% immediate access to their funds easily and reliably, is a remarkably effective solution to expensive financial alternatives like payday loans, overdraft fees, late fees and the like. The research also shows that DailyPay can stop reliance on regularly borrowing from friends to make ends meet, reduce financial stress and improve overall financial wellness.

Aite-Novarica found that the use of DailyPay improves worker financial outcomes for a substantial majority of users. More than eight out of 10 (82%) respondents that access their DailyPay BalanceTM on-demand said they worry about money less since they started the program, and 75% said they are able to budget and plan better with the ability to access their earnings on-demand. And these figures generally hold for those who use on-demand pay more frequently, including those who use larger percentages of their pay before payday, according to the survey results.

“The survey respondents were using some costly and arguably inferior alternatives prior to gaining access to DailyPay,” Leslie Parrish, Senior Analyst, Aite-Norvarica said. “These consumers largely feel more in control of their finances after using DailyPay.”

The key findings in the research report include the following:

  • The vast majority of prior payday loan users and overdrafters were able to move away from these suboptimal behaviours and most of them attribute this change to DailyPay.
  • The Aite-Novarica Group conservatively estimates that frequent payday loan users save between $624-930 annually using DailyPay.
  • 95% of those who were previously reliant on payday loans in any way either stopped using payday loans (81%) or reduced use (15%) after using DailyPay. Nearly nine out of 10 (88%) of those responding said that they stopped or reduced use of such loans because of DailyPay.
  • The Aite-Novarica Group conservatively estimates that most overdrafters save $660 annually using DailyPay.
  • 97% of those who said they had overdrawn their bank account prior to using DailyPay now rarely or never incur overdraft fees (79%) or report experiencing fewer instances of overdraft fees (18%) after using DailyPay. 75% gave credit to DailyPay for this reduction in overdraft charges.
  • DailyPay users also report being able to better manage their bill and loan payments and reduce requests for help from friends or family.
  • 88% had less trouble with bills and loan payments after using DailyPay.
  • 94% give credit to DailyPay for this change to make/bill loan payments.
  • DailyPay reaps positive outcomes across the board for users as the product has caused them to worry less about money (82%), improved their ability to budget and plan (75%), and allowed them to reduce debt (60%) and those who tend to use DailyPay relatively more frequently report even higher average savings and even more extensive prior reliance on inferior, predatory alternatives.

“This data is transformational and supports a very important conclusion — DailyPay helps working Americans stay out of debt,” said Mattew Kopko, Vice President of Public Policy, DailyPay. “Because of DailyPay, 4 in 5 payday loan or overdraft users are freed from the cycle of debt with most of the remaining 20% experiencing substantial financial benefits. People are saying clearly that they need this easy and reliable service to make ends meet.”

DailyPay partnered with the Aite-Novarica Group, a financial industry research and advisory firm that focuses on financial issues, to independently conduct research on its on-demand pay customer base. Aite Novarica’s online survey of 1,114 DailyPay customers was conducted May 2021. 95% confidence interval with 3-point margin of error

Author

  • Francis is a junior journalist with a BA in Classical Civilization, he has a specialist interest in North and South America.

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