Estimates from ME Bank show that over 40% of Australian workers are living paycheck to paycheck. People living by their next paycheck will find it near impossible to meet unplanned expenses and often find themselves at the mercy of a multitude of bank fees. As a result of not having enough cash to meet their financial obligations at times, they might turn to credit cards, use the overdraft feature of their transaction account or access potentially dangerous payday loans.
All of these options come with a cost. While a small $10 overdraft fee might not seem like much at first, it can quickly add up to a serious amount of cash if relied on regularly. An increasingly insidious cause of additional bank fees lies in the rise of recurring digital subscriptions, such as video and music streaming services. Their growth has been phenomenal, and their influence will continue to increase as digital adoption accelerates as we stay at home and online, more than ever before.
Digital Subscriptions are Growing Rapidly
The number of paying Netflix subscribers has grown exponentially since its rise to video streaming dominance in the early 2010s. Now approaching 200 million people globally, it’s hard to find someone who doesn’t have access to a Netflix subscription, or a similar competing streaming service. Music streaming leader Spotify appears to be following the same path with almost 150 million paying subscribers as of Q1 2021.
Streaming Services Often Lead to Overdraft Fees
While the individual cost of each service is relatively small, often less than $20/month, the cumulative charge can add up to a significant chunk. This is further exacerbated by the difference in timing. Unless you signed up to every service on the same day and identical billing cycle, your payments would be split up throughout the month, making them difficult to keep track of. If your account is often sitting with a low balance, for example, the week before your next payday or the week after your rental payments are credited from your account, then even a small direct debit charge can send your account into an overdraft.
According to the RBA, Australian households pay over $4 billion a year in bank fees. While this amount is, fortunately, declining each year slightly, it’s still a substantial cost that is avoidable in many cases. Overdraft fees seem to unfairly target those that are most vulnerable. For example, during last year’s banking Royal Commission it was shown that ‘ANZ allowed customers on Centrelink benefits to go into negative balance and then charged them up to $60 a month in overdraft fees as well as 17 per cent interest.’ Whether this is fair or not does not change the reality for many who are stung with the fees.
Top Up Your Account with Paytime
Earned Wage Access providers, such as Paytime, allow employees to access their earned pay before their usual payday. This flexibility may help alleviate unnecessary bank/overdraft fees and the reliance on credit as they can top-up their transaction account whenever they require an additional buffer, instead of trying to ‘hang on’ until their next paycheck. While managing recurring bills is a more significant issue than just the timing of pay, on-demand access to earned wages will undoubtedly help deliver some flexibility in funds until their next payday arrives.
Paytime is a mobile app that allows your workforce to access their earned wages whenever they want, for a small platform fee less than the cost of a cup of coffee. Paytime is a great tool to establish financial wellness in your workforce and reduce financial stress by equipping them with a means to support responsible spending decisions.
Pay frequency plays a significant role in your employee’s levels of financial wellness. If your company wants to empower your employees and improve their financial wellbeing by enabling flexible on-demand access to their earned wages, contact Paytime today!
