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More banks discontinue deposit advances

By Allison Ross · Bankrate.com
Friday, January 17, 2014
Posted: 4 pm ET

Wells Fargo and U.S. Bank announced Friday their intentions to get rid of their deposit advance offerings to comply with guidance from regulators about the controversial short-term loan offerings.

The news comes on the heels of Regions Bank's announcement earlier this week that it, too, is winding down its deposit advance program, called Ready Advance.

Wells Fargo and U.S. Bank had previously said they were reviewing guidance released in late November from the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. that outlined standards that banks should meet if they choose to offer deposit advances to consumers.

Some had complained that the guidelines would basically force banks to abandon deposit advance products. The guidelines include such things as having banks assess a consumer's ability to repay the loans before authorizing approval, or having banks institute a cooling-off period, during which a bank should wait one payment cycle -- usually a month -- after one deposit advance is repaid before another advance is offered.

U.S. Bank said it will quit offering its Checking Account Advance product to new customers at the end of this month. The product will be completely discontinued by May 30. "Customers who have an outstanding balance at that time will be offered extended repayment terms," it said in a press release.

Wells Fargo will stop offering its deposit advance program to any consumer checking accounts opened Feb. 1, 2014, or later. It said it is finalizing a transition plan for current customers using the program, saying current customers will be able to continue using the service until mid-year.

U.S. Bank mentioned the regulators' guidelines in its announcement, but Wells Fargo did not, saying only that discontinuation of the service is not expected to have a material impact on the company.

With deposit advances, the bank fronts the borrower an advance on his or her next direct deposit. Then, the next time sufficient funds are deposited into the borrower's account, the bank takes back its money, along with a fee.

Surveys have shown that consumers like deposit advances and similar payday-loan offerings. But consumer advocacy groups and some lawmakers have called for an end to these products, saying they are predatory and can trap consumers in a debt cycle.

Have you ever tried one of these products?

Follow me on twitter: @allisonsross.

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30 Comments
Linda Billingsley
July 29, 2014 at 7:52 am

My understanding these company was having a problem with a customers conversation of how the check advance put them in a fincial crises understandable but why shouldnt the employees of us bank or banks not have this as one of there employee perk

Laura C
July 24, 2014 at 11:55 pm

Shame this has happened now I have to get pay day loans at much higher rates. Maybe someday they will bring it back, like the Twinkie...

Randy b
July 19, 2014 at 2:15 pm

Very disappointed that US Bank discontinued the cash advance. I don't use it very often, but when I needed it, it was a lifesaver. I will start looking for a bank that does offer cash advance, if there are any.

Randy b
July 19, 2014 at 2:14 pm

Very disappointed that US Bank discontinued the cash advance. I use it very often, but when I needed it, it was a lifesaver. I will start looking for a bank that does offer cash advance, if there are any.

Mallissa Rogge
July 01, 2014 at 2:32 am

I agree I don't want to bank their now that they are taking this away it helped me more times than I could count especially when I needed diapers for my baby, shame on them. For some of us it was the only way to get a short term loan without the terrible high rates ppl like blue sky charge and u could take as little as you needed like 40$ I am very disappointed and from what I can see their are no banks offering this now so now u gotta go further in debt to get a little help because ur credit score might not be great

kj
June 29, 2014 at 8:27 am

It seems "the system" is designed for consumers to fail. Stopping this service is further evidence of the truth of that appearance.

leda romero
June 27, 2014 at 10:33 pm

Might close my account. This was one of the main reasons I loved my account. Too bad they stopped this.

LEESA EDWARDS
June 23, 2014 at 6:13 pm

VERY DISAPPOINTED WITH THIS FEATURE BEING REMOVED FROM U.S. BANK. I HAVE BEEN A CUSTOMER OF THEIRS SINCE THE YEAR 2000. ARE THERE ANY BANKS THAT OFFER THIS FEATURE OTHER THAN CHASE? I WOULD LIKE TO ENROLL!! IF NOT, I AM ABOUT TO PUT MY DIRECT DEPOSIT ON A DEBIT CARD. U.S. BANK WANTS TO CHARGE A FEE EVERY MONTH, BUT NOT ACCOMMODATE THEIR LONG STANDING CUSTOMERS WITH THIS FEATURE, BOO, BOO U.S. BANK!!!. AT LEAST WELLS FARGO SAYS IT WILL CONTINUE ITS ADVANCES FOR THEIR LONG STANDING CUSTOMERS, JUST NOT THE NEW ONES. WISH I HAD BEEN WITH WELLS FARGO, THEY KNOW HOW TO TREAT THEIR LONG STANDING CUSTOMERS! REMEMBER, LOYALTY BREEDS LOYALTY!

lisa h
June 23, 2014 at 9:01 am

Dumb! If you ask me. Us bank, you just yet again disappointed us customers. Cash advance has helped save us plenty of times. To find out that you've discontinued it? Really pisses me off. Now I'm thinking of switching banks.

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