- How pay advance apps and Centrelink advance payments work.
- Compare eligibility, timing, amounts, costs and credit score impact.
- Pros and cons of pay advance apps and Centrelink advances.
If you’re in part-time or casual employment and still qualify for Centrelink payments because of your low income, you may be wondering which is your best option when you need emergency cash to meet unexpected expenses – a pay advance app or a Centrelink payment advance?
We’ve delved into the features of both options and worked out their pros and cons, to help you make the right choice for your situation.
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Eligibility
Pay advance app
To qualify for a pay advance via a pay advance on demand app you need to be:
- Aged 18 or over.
- An Australian citizen or permanent resident.
- Employed, with your wages regularly deposited directly into a bank transaction account by your employer.
- Receiving a minimum weekly income (after tax) as specified by the app. This can vary between $300 and $450, depending on the app.
- Receiving no more than 50% of your income from Centrelink.
Centrelink
The qualification requirements for a Centrelink payment advance are complex, and vary depending on the type of benefit you are receiving (e.g. JobSeeker, Youth Allowance, ABSTUDY, Austudy, Parenting Payment).
To find out the exact eligibility requirements for an advance payment of your type of benefit, go to the Services Australia Advance Payment page.
Timing
Pay advance app
It’s usually quick and easy to download a pay advance app and set up an account. If you meet all the eligibility criteria and pass the automated credit assessment, you may be able to get a pay advance in a matter of minutes.
Centrelink
You can apply online with a myGov account linked to Centrelink online account. (If you don’t have these accounts already, you can set them up online.) Applications can also be made via the Services Australia Express Plus mobile app. There are detailed instructions on how to apply, and if you have information about your regular expenses ready to hand it should take only about 15 minutes to complete the application.
Once you have submitted your application you will be advised quickly whether or not you are successful, and the amount for which you are eligible. Payments may be made in instalments, with the first instalment expected to arrive in your bank account within two working days.
Amount available
Pay advance app
A pay advance app amount is limited to a percentage of your regular earnings, and further restricted by an assessment of what you can afford to repay.
Centrelink
A Centrelink advance depends on what type of benefit and amount you are receiving, the amount of your regular expenses, and in some cases whether you have already taken an advance recently.
The Services Australia Advance Payment page lists the minimum and maximum advance amounts for each type of benefit. Most benefit types have a maximum advance of $500.
Credit score required
Neither pay advance apps nor Centrelink check your credit score by enquiring at a credit bureau. Instead, each of them has an internal system for checking your ability to repay an advance.
Credit score impact
Traditional loans (such as personal loans) and payday loans can have a small negative impact on your credit score when lenders make a hard enquiry to a credit bureau about your score. They can affect your score badly if you pay late or default on your loan, because the lender will report you to a credit bureau (the scorekeeper).
Pay advance apps
Pay advance apps don’t check your credit score, and since your repayment is automatically debited to your bank account on your next payday, late payments and defaults are unlikely.
Centrelink
Centrelink does not check your credit score, and also deducts the loan repayments out of your normal regular Centrelink income (usually spread over 13 fortnights) so you will not pay late or default. Centrelink also says that Centrelink debt will not affect your credit score.
Overall cost of borrowing
Pay advance apps
Pay advance apps charge a transaction fee for each advance you take, instead of interest. Fees vary from a flat $2-$5, to possibly 5% of the amount advanced.
Centrelink
Centrelink does not charge any interest or transaction fees on advances, so it’s a completely cost-free form of borrowing.
Pros and cons
Pay advance app
Pros
- Instant cash before payday.
- Automated repayment, so no late payment fees.
- No credit score impact.
Cons
- Transaction fee payable, which can be high if calculated as a percentage of the advance.
- Advance amount limited to a percentage of your pay and repayment affordability.
- Most advances repayable in full on next payday.
Centrelink pay advance
Pros
- Free borrowing with no interest charge or transaction fee.
- Long repayment period. Up to six months in easy equal instalments.
- No credit score impact.
Cons
- Can take up to two business days to receive cash.
- Eligibility rules and application process are fairly complicated compared to an app.
- Advance amount limited to what Centrelink thinks you can afford to repay, often with a maximum of $500.
Verdict
Provided you can navigate the online eligibility and approval process, wait up to two business days for your cash and manage with a maximum of $500, a Centrelink payment advance is a better option than a pay advance app because there is no borrowing charge.
