Don’t Fall for the Cartoon Bear’s Trap

The weather’s cooling off, but those triple-digit interest rates still burn

Andy Spears




Do it.

Maybe you feel like you need some extra cash just because the season changed to fall.

Or, you’re in a car near a mountain and think: “High-interest cash would make this trip better.”

Well, you’re wrong.

You don’t need an extra cash advance from a cartoon bear.

No matter what the Dave App tells you in those friendly emails.

Dave likes to tell you it is easy to get the cash and you can avoid overdraft fees or credit card late fees.

I mean, it IS easy to get the cash.

But then, well, you have to pay it back.

Here’s a bit about that:

A story from the L.A. Times digs deeper, explaining just how bad the fees associated with friendly, cartoon bear apps can be.

Here’s how the Times broke down the fees associated with a loan from Dave:

Given that the money had to be repaid in 12 days, the $5.99 fee and $2 tip, if considered as interest, cost Goad 122% on an annual percentage rate basis — a metric that helps compare the relative cost of loans. If he tipped $6.93, the company’s average in the first quarter, it would amount to an APR of nearly 200%. If he chose a 15% tip, the total cost would rise to $35.99 with an APR of 547% — corner payday loan territory.

Oh, and Dave recently announced they are raising their fees.

So. Well, just don’t fall for their trap.

Adam Hardy writes in that a number of cash-advance apps are suggesting they offer a viable alternative to payday loans but may instead offer a similar product in a more tech-friendly package.

Hardy reviews the policies and practices of apps such as Dave, Earnin, and Brigit and finds that:

“. . .consumer experts warn their fees are just as bad as — if not worse than — traditional payday loan APRs, with rates that can easily top 300%. And, they say, the apps can actually trigger overdraft fees.”

Stay away from bears.

Even cartoon bears.

Even cartoon bears bearing cash.

I write about consumer finance issues and also education policy and sometimes even fiction.



Andy Spears

Writer and policy advocate living in Nashville, TN —Public Policy Ph.D. — writes on education policy, consumer affairs, and more . . .