Bank of America has launched a new payday loan alternative called ‘Balance Assist’. This new program is only available to checking account holders who have had an account for at least one year. The program will launch by January 2021 in a few selected states (yet to be announced).
Eligible customers will be able to borrow up to $500, the loan fee will be $5 regardless of the size of loan and must be paid back over 90 days in monthly installments, they can also be paid back early without any penalty (full $5 fee still applies). Interestingly these loans will also be reported to a consumers credit report if they are succesfully paid back in full. These should report as an installment loan meaning these could be used to strengthen your credit report (similar to the previous secured loan trick).
U.S. Bank & Cash App have launched similar programs before, but with significantly higher fees. This actually seems like a good offering from Bank of America, if you borrow the full $500 then it works out to be an effective APR of 4%. Whereas other payday loans are significantly more expensive. I suspect Bank of America will only offer this to accounts with a history of their payroll being deposited into the account, at least to start with.
