Wells Fargo Launches Small Dollar Loan, Offering Customers $250 or $500 for Flat Fee
Wells Fargo recently launched a new financial product, called Flex Loan, which is marketed as a small dollar loan to help customers meet short-term cash needs. The loan is available through the bank’s mobile app to eligible consumers in amounts of either $250 or $500 for a flat fee of $12 or $20, respectively, and must be repaid in four equal monthly installments.
“What makes Flex Loan different from other payment options is its certainty of approval for eligible customers, the simplicity of obtaining funds in minutes, and clarity around how much it will cost to pay for things like holiday gifts, travel, or an unexpected home or car repair expense,” said Abeer Bhatia, head of Personal Lending and Retail Services at Wells Fargo.
After customers accept the loan offer in their mobile app, they set up their repayment plan and the funds are immediately available for use with their debit card. The bank determines eligibility by evaluating consumer data such as the length of time consumers have had accounts and how well they manage accounts. The product does not have applications, hidden fees, interest charges, or late charges.
According to American Banker, Wells Fargo is the fourth large or regional bank to launch an affordable small dollar loan product, after Bank of America, U.S. Bancorp, and Huntington Bancshares. “Major banks… can offer safe, affordable alternatives to their customers that need the most help,” said Alex Horowitz, principal officer of Pew Charitable Trust’s consumer finance project.
Flex Loan is part of Wells Fargo’s efforts, announced in January, to help customers meet short-term cash needs and avoid overdraft fees. The bank launched several products like Early Pay Day, which gives customers access to eligible direct deposits up to two days early, and Extra Day Grace Period, which gives customers an extra business day to make deposits and correct their balance to prevent an overdraft fee.