Earned Wage Access is an increasingly popular employee benefit which allows workers to access a portion of their earned wages before their scheduled payday. While this practice has its merits, there are also several myths and misconceptions surrounding Earned Wage Access.
In this blog, we’ll debunk five common misconceptions surrounding Earned Wage Access to help you better understand this financial tool.
1: Earned Wage Access is Just Another Form of a Payday Loan
One of the most prevalent misconceptions about Earned Wage Access is that it’s just a payday loan.
However, this couldn’t be further from the truth. Payday loans typically come with high-interest rates and fees, trapping borrowers in a cycle of debt.
MoneySavingExpert call payday loans a ‘financial nightmare which should be avoided entirely if possible’. On average they cost around £24 per month per £100 borrowed, as opposed to Earned Wage Access from Income Group, which would cost £0 to access £100 of earned salary before payday.
Martin Lewis, founder of Money Saving Expert says ‘Salary advances, though they’re a very good alternative to payday loans, are not without their own issues.’
EWA from is an employee benefit that allows workers to access the wages they’ve already earned without any charges, interest or hidden costs. Earned Wage Access is designed to provide financial flexibility, not to create financial burdens.
2: Earned Wage Access Encourages Irresponsible Spending
Another common misconception is that EWA promotes reckless spending.
Critics argue that giving employees access to their wages before payday encourages impulsive buying. In reality, Earned Wage Access is more about providing financial stability.
It helps employees cover unexpected expenses, such as unexpected bills or car repairs, without resorting to high-cost loans or credit cards. Responsible use of EWA can actually help people avoid debt and financial stress.
3: Earned Wage Access Hurts Employer-Employee Relationships
Some believe that offering EWA to employees can damage the relationship between employers and their staff.
They argue that it creates an expectation of on-demand payments, which may be logistically challenging for employers. However, when implemented correctly, EWA can foster goodwill among employees, improve job satisfaction, and ultimately strengthen the employer-employee relationship.
Employers can integrate Earned Wage Access seamlessly into their current payroll structure, still with the flexibility to choose how frequently EWA is offered, maintaining control over the process.
4: Earned Wage Access Is Only Beneficial for Low-Income Workers
Another myth surrounding EWA is that it’s only relevant for low-income workers struggling to make ends meet.
While EWA can be a valuable resource for those living payday to payday, it can also benefit employees across all income levels.
Financial emergencies and unexpected expenses can affect anyone, regardless of their income. EWA provides a safety net for everyone, promoting financial well-being and reducing stress in the workplace.
5: Earned Wage Access Undermines Traditional Budgeting
Sceptics argue that Earned Wage Access undermines traditional budgeting by allowing employees to access wages as needed, rather than sticking to a fixed payday schedule.
However, EWA can actually complement budgeting efforts by helping individuals better manage their finances. Employees can use EWA strategically, combining it with their budget to handle unexpected expenses or save for future goals. It doesn’t eliminate budgeting but enhances it by providing flexibility.
So is Earned Wage Access a benefit?
Earned Wage Access is a valuable financial tool that, when understood correctly, can benefit both employees and employers.
EWA from Income Group is forever free for employees and gives employers a positive ROI – calculate your cost saving here.
Dispelling these common myths surrounding EWA, it remains essential to promote its responsible use and help individuals achieve greater financial stability.
As the workplace evolves, Earned Wage Access can become an essential part of employee benefits, improving job satisfaction, and reducing financial stress for workers across various income levels.