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Over the years, there have definitely been times when I really could have used a few extra dollars in my bank account before payday arrived. Lacking many options, my younger days were filled with overdraft fees that only made my financial situation worse. Luckily, these days, there are a growing number of tools that consumers can use to not only avoid these dreaded overdraft fees but also hopefully avoid pricey payday loans. Among these tools is an app I recently came across called FloatMe, which allows users to borrow up to $50 to help get them to payday.
So how does FloatMe work and is it ultimately worth it? Let’s take a closer look at the platform in its current state as well as what’s ahead.
Signing Up
To open a FloatMe account, you’ll just need to provide a few pieces of information. This starts with you entering and confirming your phone number but you’ll also need to share your name, and email address. As we’ll discuss in the next section, you’ll also need to link a bank account in order to actually use the service.
Currently, neither opening a FloatMe account nor requesting Floats impacts your credit in any way. However, in the future, the app says they may offer ways for users to report their positive payment history.
Linking accounts
The way FloatMe works is that it monitors your direct deposits to confirm your income, giving the app more confidence that they’ll receive any money you borrow back. Because of this, in order to use FloatMe, you’ll need to link the bank account where you receive your payroll direct deposits. Moreover, these payments need to arrive on a weekly, bi-weekly, or monthly basis.
As you may have guessed, linking here is done via the API Plaid. This will allow you to select your bank, log in, and authorize FloatMe to view your transactions. Once this is done, the app will begin monitoring and you’ll see when you become eligible for Floats.
Free trial and monthly fee
When you sign up for FloatMe, you can try the platform free for 30 days. After that, you’ll be charged $1.99 a month to stay on as a member. This fee will be taken out of your linked account and will hit automatically if you don’t cancel beforehand.
Something important to note is that, while you’ll be able to get a decent look at the app itself during these 30 days, you likely won’t actually have a chance to get the full experience. That’s because, according to the FAQ, FloatMe’s system requires a minimum of three direct deposits (with each totaling at least $150) to be monitored before the ability to request Floats is available. So, with most people getting paid every two weeks, there’s a strong chance that you won’t meet this requirement before your trial is up. I’m not sure whether or not this is intentional so that FloatMe doesn’t have people make an account to get a free Float and move on — but I think a 60-day free trial would be more useful so people can see exactly how the program works before paying.
Dashboard and beyond
There are only a few tabs in the FloatMe app, with the default one being what I’ll call your Dashboard. Here, you’ll not only see any available or outstanding Floats you have but will also see how much you’ve made compared to how much you’ve spent as of late followed by some recent transactions. To dive into further into such info, you can tap the second tab (with the graph icon) to view spending info by category, merchant, etc. Of note, this info is only pulled from your linked account with no option to link additional ones. So, if you’re not using your linked account exclusively, this won’t give you your full financial picture.
Requesting Floats
Once you become eligible to request Floats, you’ll first be asked to link a debit card to FloatMe. After doing this, you’ll be able to see how much you’re currently entitled to request in Floats. While the app advertises that you can request up to $50, you’ll need to work your way up to this limit over time. Instead, when you first start out, most users are able to request between $10 and $20.
When requesting a Float, you’ll first select how much you want. Then, users will be able to choose whether they’d like a “Standard Float” with an estimated transfer time of 2 to 3 business days or an Instant Float that arrives within 2 hours. Unfortunately, this latter option comes at a cost of $4. Finally, before submitting their request, customers can review the repayment date — which should be tied to your their pay date (if it’s not, FloatMe advises that users can reach out to support). After agreeing to the terms, members can submit their request and their Float should be sent.
For what it’s worth, for both of the Floats that I’ve tried for testing, my money arrived a bit faster than expected. The day after submitting my Standard Float request, the money was already pending in my account. I’ll also note that my starting Float amount was $20.
Paying back Floats
There are a couple of different ways that FloatMe customers can pay back their Floats. First, while you’ll need to wait at least 24 hours after your request to do so, you can then arrange to pay back your Float right from your Dashboard. Once your Float is paid back, you’ll even be able to request another (although the same 24-hour hold time applies).
Alternatively, if you don’t pay off your Float early, the money will be automatically transferred from your linked bank account on the date stated when you agreed to the Float. What happens if the money isn’t there? Well, according to their FAQ, FloatMe will continue checking your account balance and will attempt to repay the Float when they “believe it is likely not to cause an overdraft on your account.” Failure to pay back Floats may also result in users getting banned by the service.
Notifications (in Settings)
One other feature worth mentioning in FloatMe is the ability to arrange notifications. Namely, you can have FloatMe alert you when your bank balance falls below a certain threshold. In turn, you can then decide whether or not it’s time to request a Float.
FloatMe MVP (upcoming)
As I was getting ready to write this review, I got an email from FloatMe informing me that they were opening a waitlist for their upcoming product FloatMe MVP. According to that email, this version of the service will include a rewards debit card (issued by Evolve Bank & Trust) that can also help build credit, a bills tracker, and other exclusive features. MVP will come at a cost of $4.99 a month or $39.99 per year if paid upfront. Presumably, this fee also includes the standard FloatMe service, although that isn’t totally clear at this time.
Given the vaguery, it’s hard to give a ruling on FloatMe MVP right now. However, I would prefer it if such extras came included in the main FloatMe service — which already comes at a monthly cost — rather than creating another service tier. In any case, with MVP expected to begin rolling out this summer, stay tuned for further updates in the future.
FloatMe is a sleek, easy to use, and potentially quite helpful service. With a simple system and interface, the app really does allow users to nab a few extra dollars in a pinch and (hopefully) help them prevent overdrafts. That said, the expenses of FloatMe can still add up — especially for those needing to use the Instant Transfer option.
First, the $1.99 a month fee might not sound like a lot but, with the app not offering a ton else aside from the Float function currently, you’re really just paying for this option. On top of that, as I mentioned, the Instant Transfer fee is a whopping $4. Considering that other apps offer similar speedy transfer options for $1 or less, this is honestly outrageous considering how small the transfers in question are. For example, Venmo recently raised its Instant Transfer fee to 1.75% (with a 25¢ minimum). So, for a $50 transfer, the fee would be 86¢ — much lower than the $4 FloatMe charges.
Because of these fees, while I like the FloatMe app overall, I might recommend that users look into other options instead. In particular, digital account options such as Current, Varo, T-Mobile Money, and others all have either overdraft protection or advance options that can either be unlocked by meeting certain requirements (such as having direct deposit or making a certain number of debit card purchases) or paying a one-time small fee. To me, these options likely make more sense for those concerned about possibly needing a few extra dollars before payday. That said, with FloatMe MVP on the way, I’ll be interested to see how the app evolves and whether or not it might eventually morph into a product that’s worth its cost.
Originally published at Dyer News.
