Paycheck advance products often have costly fees consumers are unaware of. The CFPB rule would force lenders to disclose these fees upfront.
Paycheck advance products, often referred to as "earned wage" products, give consumers access to their paycheck early when they’re in a pinch. Offered through employers or as direct-to-consumer loans, these products can be free but many come with costly fees. To combat misunderstandings around these loans, the Consumer Financial Protection Bureau has proposed a rule.
Many lending products are growing in popularity, particularly since inflation has driven everyday costs up. Buy now, pay later options are especially popular. Nearly 85% of merchants say BNPL was used more often during online checkout within the last 12 months, a PYMNTS study found. Although consumers appear to love BNPL options, they’re not always a favorite among merchants, according to the study.
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