Is Dave App Legit? What to Know About $500 Cash Advances

Imagine you’ve just managed to cover rent and pay the bills, but your bank balance is decreasing fast. Payday’s still a few days away, and then you come across an app promising a quick cash boost to help you get by until that next paycheck arrives.

The offer is obviously tempting—a small advance to cover your essentials almost immediately. It sounds like a bit of breathing room when you need it most and avoid paying overdraft fees.

One such app is called Dave: Fast Cash & Banking. It says its mission is to “help you with cash when you need it quickly, they can lend you up to $500 without having to worry about interests and late fees.“

Sure, that sounds nice. But don’t be misled because these cash advances aren’t really free money. Let’s find out why.

What Is the Dave App?

Check Your Qualification

While the Dave app makes a great impression in helping you out with cash advances it’s essentially just making it easier for people to borrow money and does not provide a long-term solution to improve your financial situation.

Dave stands better than payday loans with high interest rates and fees that can lead to a cycle of debt, but borrowing money is a dangerous game to play.

How Does Dave App Works?

Dave is free to download but you must pay a $1 fee to use any of its features. Most people go for the ExtraCash feature but there are checking, creating saving accounts with Dave, automatic “budgeting” and side hustle suggestions on the app.

Let’s take a look at how they work.

#1. Advance ExtraCash

To get a $500 pay advance, you need to use Dave’s ExtraCash. But there are a few steps you’ll need to complete before the money reaches your bank account.

1. Download the Dave app. You can download the Dave app from the App Store and register an account. It requires your email address, phone number, and name as usual.
2. Link your existing bank account. To have access to the advance, you must create an ExtraCash account within the app.
3. Open a spending account. Regardless of using it or not, you must also open a spending account on Dave. This non-interest-bearing checking account basically allows you to make payments, transfers, deposits, and access to cash advances.
4. Find out how much you’re approved for. Dave will go through your spending and income history and let you know how much you can borrow. You might not qualify for the full $500 but whatever you get can have it one advance at a time.
5. Pay the fast-funding fee. It takes about three days to process a cash advance with Dave or you can pay an express fee of $3 to $25 (fees can change over time) to get it within an hour. You will presumably have to opt for the express option if you are in a hurry to receive funds; many users do so as reported.
6. Watch out for tips. Dave offers a tip option when you receive a cash advance. The tip is set to 15% by default, but you can manually adjust it if you don’t want to tip that amount. While it might be acceptable for a first-time user to leave the tip as is, many people do not realize they are regularly tipping 15% on every cash advance that can add up.
7. Transfer the funds into your account. Once approved, Dave will transfer the money to your Dave Spending Account or to an external checking account, depending on your selection. When you take an ExtraCash advance, your Dave Spending account will indeed show a negative balance until you repay the borrowed amount. If you choose an external account, that balance will not be negative, but the debt will still be due once the funds are transferred.
8. Repayment Date. Dave typically sets your repayment date to your next payday if they can identify it. If they cannot determine your payday, they usually default the repayment to a set date, often the next Friday or within a similar time frame. On the repayment date, Dave will indeed automatically deduct the owed amount from your linked account to settle the balance.
9. Extension Request: Dave allows users to request a repayment extension, which is generally up to 14 – 30 days, although approval is not guaranteed.

#2. Dave Spending Account

The Dave Spending Account can be valuable to certain users, particularly those who want basic, low-cost banking services without the risk of overdraft or minimum balance fees.

No overdraft fees, monthly maintenance fees, and minimum balance requirements can be a relief.

It comes with a debit card that gives you cash-back rewards although limited to certain purchases with eligible merchants.

You can also receive paychecks up to two days early, depending on your employer and payroll provider. And if you choose to keep a certain amount of money in your account can help you earn up to a 4% interest rate.

Realistically, considering you are already looking for a cash advance at Dave, keeping your money on the sending account for a yearly interest rate can be hard.

Dave also offers a Goals account to help you save for a trip, a car, or any other goals. Of course, this isn’t the only option—you will find many other banks and credit unions that provide high-yield savings accounts with competitive interest rates.

#3. Automatic Budgeting

Although this feature is intended to help users avoid overdrafts and manage cash flow, I believe it is still just a basic budgeting tool that estimates a user’s disposable income by showing how much they’ll have left after paying recurring bills.

It’s simple and gives you the idea of remaining funds rather than a full budgeting experience.

It cannot set up a comprehensive, itemized budget or create detailed financial plans. You’ll find many other dedicated budgeting apps that offer these advanced capabilities that allow you to plan your finances in more detail.

#4. Side Hustle Tips

For a $1 monthly membership fee features such as suggestions to earn extra income, including paid surveys and a side hustle job board might not be worth it.

It’s helpful to get tips for earning extra cash, but I’m sure there are plenty of free resources out there that don’t charge a $1 membership fee.

How To Qualify For a Dave Advance

Although the Dave app does not perform credit checks, there are indeed eligibility requirements to qualify for the ExtraCash advance.

And even if you are approved, you are not guaranteed to receive the full $500. Typically, as a first-time user, you may be approved for a smaller amount, with the option to increase it over time based on your repayment history.

So your financial activity and history with the app can increase the chance of getting a $500 cash advance.

To qualify for Dave’s advance cash, you must meet these requirements:

• Be at least 18 years old.
• Be a U.S. citizen or permanent resident.
• Have a Social Security number or tax identification number.
• Have a valid email address and consent to electronic communications.
• Have an external bank account with at least 60 days of history.
• Maintain a positive bank balance.
• Have at least three recurring deposits in your bank account.
• Receive a total monthly deposit of $1,000 or more to qualify for a higher advance.
• Have a positive income history and spending patterns.

When you are proven eligible you will get notified via ExtraCash push notifications or text messages (SMS) on your number.

What If You Can’t Repay Your Cash Advance?

Dave tries to avoid triggering overdrafts but will withdraw whatever balance is available when your payment date arrives, making multiple attempts if necessary until the full amount is recovered.

This partial collection process may lead to frequent, smaller withdrawals until your debt is settled, which can complicate your financial situation if you rely on those funds for other expenses.

For instance, if Dave takes what’s available in your account but leaves other scheduled transactions unpaid, it increases the risk of over-drafting later as your funds are gradually depleted.

And, if you fail to repay their balance within 120 days, Dave will transfer the debt to a collections agency called TrueAccord. This step can lead to additional fees and may negatively impact your credit score.

So it is essential to resolve any outstanding balance promptly to avoid the potential consequences of collection actions, including the impact on future creditworthiness.

Is Dave App Legit?

Yes, Dave is a legitimate financial services app that was launched in 2016 and is based in Los Angeles, California. It partners with Evolve Bank & Trust, an FDIC member, to offer banking services. This relationship means that the funds in Dave’s checking accounts are insured up to the FDIC limit of $250,000, adding a layer of security for users.

But apps like Dave provide cash advances to help users bridge financial gaps between paychecks, but they are often short-term fixes rather than sustainable solutions.

Despite the app’s promises to help users avoid high-interest payday loans, it relies on similar principles, as high tips can effectively mirror the annual percentage rates (APRs) associated with payday loans.

For instance, if a user takes a $100 advance and tips $10, the effective APR can be close to 261%, which is high when compared to typical bank loan rates.

The main issue with relying on cash advance apps like Dave is that they don’t address underlying financial instability; instead, they might lead users into a pattern of repeated borrowing, which can be hard to break – it’s just another trap to help you keep borrowing money.

Once payday arrives and the loan repayment is deducted, you may find yourself in a similar financial position as before.

So it’s wise to use such apps sparingly to avoid the potential pitfalls of relying on short-term advances for financial stability.

Recently, the Federal Trade Commission (FTC) has taken action against Dave for allegedly deceiving consumers and charging undisclosed fees.

And be careful with your credentials and practice good security measures like regular password updates is recommended because past users experienced a data breach in 2020.

Who Dave is Best For?

Whether the Dave app is a good fit for you really depends on your financial needs and circumstances, but some people find it useful for short-term cash needs or managing pay cycles.

Regardless, as I mentioned before, I consider it safer to use when you have a solid plan for repayment and don’t rely on it regularly.

Look Dave is still a popular app and can be a great fit if you are someone,

1. Who needs a short-term landing
2. Looking to increase credit score
3. Need a budgeting tool that is simple to use and works
4. Looking for a low-cost banking service that offers you 4% interest on your money

FAQs

Final Thoughts:

Borrowing money, especially through short-term loans like payday advances, can provide quick relief but often leads to a cycle of debt. Once you pay back the advance, you may find yourself back at square one, needing to borrow again to cover expenses.

There are more sustainable ways to manage your finances and move forward, such as budgeting, building savings, and using credit responsibly. Breaking free from borrowing is how you regain control over your financial future.