MINNEAPOLIS, Minn.—U.S. Bank has become the first to announce a new small-dollar loan product for its checking account customers following new guidance put forth by the Office of the
Comptroller of Currency encouraging banks to offer more short-term, small-dollar loans.
The product announced by the bank – "U.S. Bank Simple Loan" – will allow customers to take out installment loans of $100 to $1,000 with specific repayment rules. Customers can only obtain one loan at a time and must wait 30 days after repayment to obtain another loan.
The NCUA in May issued a proposed rulemaking to provide federal credit unions with an additional option under its payday alternative loans (PALs) program. PALs II would not replace the current PALs rule, but would be an alternative option that features higher loan amounts, longer loan terms and less strict membership requirements. The NCUA also left open the option for PALs III, which could include different fee structures, loan features, maturities and loan amounts.
In follow-up to the NCUA proposal, NAFCU has recommended the agency allow even more flexible parameters than what is currently proposed, and has advocated for additional mechanisms to allow credit unions to provide more small-dollar loans to members in need.