Dave is designed to help you avoid overdrafting your checking account. Named after the biblical tale of David and Goliath, Dave can provide you with small loans to slay the big fees that banks may charge you when you drain your account.
Dave does a decent job of giving you a cushion if you have a bad habit of overdrafting, but it’s not a game changer. That said, the Dave Banking cash management account offered by this app does provide real value, and it also offers you a solid strategy for boosting your credit score.
Dave is a money management app with an emphasis on overdraft protection. By linking your checking account with the app, Dave tracks you expenses and texts you when you’re coming close to letting your checking account fall into the red.
The app lends you up to $75 as an interest-free loan if you need cash. The loans are only offered to qualifying users: Dave requires you to have a job with a steady paycheck in order to prequalify for the loans. To confirm, the app scans your checking account history for regular recurring direct deposits. Additionally, it takes into consideration how quickly you spend your paycheck after you receive it.
If you qualify for an advance, you’ll have the option to get $75 loans within three days or, for a small fee, the same day. Dave features two payback options: An automatic payback option, where the app will collect what you owe from your next direct deposit paycheck, or you can proactively pay back the app at an earlier date.
Dave says that getting a cash advance won’t impact your credit score, and that it charges no fees or penalties. However, it’s worth noting that you cannot change your payback date, and if you can’t afford to pay back what you owe, you could be banned from the app.
Just as when using most financial apps, security should be top of mind. Dave says it accesses your financial accounts in read-only mode, and that all your sensitive data is encrypted.
The Dave app charges a monthly fee of $1, but the company claims that it really survives on tips. After you pay back the app for your interest-free loan, you’ll have the option to leave a tip for the service. A percentage of the tips Dave receives is used to plant a tree through its partnership with Trees for the Future.
Dave comes with a budgeting feature baked in. The app scans your past expenses from your linked checking account, and uses them to predict future budget expenses. The app also predicts the size of your regular paycheck direct deposit and when it will arrive, based on past deposits. Dave also lets you manually adjust your paycheck or expense data.
Once your income and expenses are plugged in, Dave analyzes your upcoming expenses, flag you if a scheduled bill — like a Netflix or Spotify subscription — is in danger of plunging you into the red and will text you when you’re in danger of overdrafting.
Dave Banking is a cash management account that functions like an online checking account. If you opt in to Dave Banking, you get a Visa debit card and access up to 32,000 fee-free ATMs. The account has no overdraft fees and no minimum deposit requirement to open. Note that this account does not pay an APY.
Dave Banking deposits are held with the company’s partner bank, Evolve Bank & Trust, which provides Federal Deposit Insurance Corp (FDIC) insurance.
One perk: The interest-free loan option rises to $100 a pop from $75 with a standard account. Another additional feature: Side Hustles, which allows you to apply to jobs in the gig economy right from your phone.
Dave Banking has a partnership with CreditPop that helps users increase their credit score by making on-time rent and utility payments. The service typically costs $100, but for Dave Banking users who receive direct deposits in their account, it’s free.
Here’s how it works: When rent and utility payments you’ve made show up on your checking account statement, CreditPop shares that data with the credit bureaus, helping to build your credit score.
Dave isn’t particularly unique. There are a slew of similar cash advance apps out there. Here’s how Dave stacks up against popular overdraft app Earnin:
Aside from apps, other financial products that aim to deliver what Dave does are products like payday loans – and with their sky-high interest rates, Dave isn’t a bad option. However, its $75 loan limit for the standard account is itself limiting, and makes it apparent that this service was created to spot you for small expenses that can push you into the red, and not actual financial emergencies that are often the root cause of taking out a payday loan in the first place.
Dave’s digital checking account, Dave Banking, is comparable to online accounts with no overdraft fees listed on our site. With features like no overdraft fees, no minimum requirements and up to $100 in an interest-free loan, Dave Banking is a serious competitor in the checking account space.
Here’s how Dave stacks up against Chime Bank’s account, which touts a similar feature called SpotMe:
FDIC-insured fintech company Varo also offers a bank account similar to Dave. Here’s how it compares:
At its best, Dave is a crutch for people who have a bad habit of not monitoring their finances — and often have the issue of a Starbucks run resulting in a $35 overdraft fee. If you fall into this camp, Dave may be a good cushion to consider. That being said, its $75 loan cap on its standard account is extremely limiting, and a credit card could be a better bet to help hold you over between paydays, as long as you know you can pay it back in full, on time, every time.
The bottom line with apps like Dave: Money management is an essential skill to learn, and if you rely on the help of tools like this, you might have a harder time building those skills yourself.