The Pew Charitable Trusts maintains large banks have pivoted toward offering small installment loans or lines of credit to checking account customers with low or no credit scores.
Officials indicated the change stems from federal regulations designed to aid consumers, with six of the eight largest banks –
Regions Bank, Truist, Wells Fargo, Bank of America, Huntington Bank, and U.S. Bank offer the loans Pew Charitable Trusts deems safer and more affordable than payday loans or other financial services, including auto-title loans and similar agreements.
Office of the Comptroller of the Currency, FDIC, Federal Reserve Board of Governors, and National Credit Union Administration joint guidance in May 2020 aided in the loan initiative coming to fruition, per Pew Charitable Trusts.
According to Pew Charitable Trusts, the new loans offer amounts up to $500, $750, or $1,000 depending on the bank, adding borrowers can quickly access because they are automatically pre-approved or complete a quick application, and the proceeds are forwarded to their bank account upon successful completion of the transaction.
Pew Charitable Trusts noted that circumstances such as eviction, auto repossession, and utility disconnection could be addressed by accessing small installment loans. Bank account overdrafts and accompanying fees that result from such could also be addressed via the loan, saving consumers hundreds of dollars each year.