Gambling with a Cartoon Bear

How the Dave App entices borrowers to go further into debt

Andy Spears

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Photo by Hello I'm Nik on Unsplash

The Dave App — the one with the friendly cartoon bear that wants to give you a low-dollar loan right from your phone — has a new way to encourage existing customers to borrow more.

It’s bad enough that Dave charges interest rates in excess of 500% — now, the app is trying to entice customers to apply for more cash advances.

A story in the L.A. Times notes that the bear in your phone who gives out fast cash is charging up to 547% for the service

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.

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Andy Spears

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