The Consumer Bankers Association (CBA) has endorsed U.S. Bank’s new Simple Loan product, which provides a more cost-effective option for short-term loans for consumers.
CBA said the Simple Loan product fills a critical need for consumers. The product is designed to help consumers who have emergency financial needs by providing a regulated and more affordable short-term loan.
The benefits are in accordance with a bulletin issued by the Office of the Comptroller of the Currency in the spring, encouraging banks to serve consumers in the small-dollar installment loan market better. Often, these small-dollar, or payday loans, are not regulated and carry high interest rates as well as more penal terms and conditions.
“U.S. Bank’s goal is to fulfill a customer need. This program – and others like it offered by retail banks – are essential for consumers faced with financial emergencies,” CBA President and CEO Richard Hunt said. “I am appreciative regulators are recognizing the need for short-term, small-dollar credit and the necessary roles banks can play in this space – instead of forcing American families to rely on costly, less regulated lenders.”
These types of products are necessary for many consumers. A recent survey by the Federal Reserve found that nearly half of Americans do not have the necessary savings on hand to cover a $400 emergency expense.