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  • Credit
  • Innovation
  • United States

U.S. Bank Enters Instant Credit Market

After a two-year test phase, U.S. Bank launches an instant credit service called Simple Loan to help American customers deal with unanticipated or short-term cash needs.

Simple Loan allows US checking account holders to borrow between $100 and $1,000 to be paid back in three instalments: $12 to $15 are charged for every $100. This loan is available via their “Online Bank” service or “Mobile Banking” app.

The agreement-in-principle is sent in real time and the amount is released immediately. Subscribers must hold a checking account for a minimum of 6 months, with 3 months of recurring direct deposits to this account, and a Social Security Number.

These credit lines are meant for fragile customers undergoing unforeseen short-term financial issues, and who may not have saved enough to remedy such situations. This option is described as reliable, simple, transparent and more affordable than other products on this market or overdraft options.

Comments – Instant credit: step by step rollouts in the US

U.S. Bank is the 5th commercial bank in the US, and the first to be introducing this type of short-term solution after a two-year test phase. They intend to meet specific needs for customers having to deal with unexpected financial difficulties, and urgent need to apply for a small cash loan. According to a study released in May by the Fed, roughly 40% of the adult population in the US would not be able to cover a $400 unexpected expense without selling personal belongings or borrowing money.

The Simple Loan option only allows each customer to subscribe one loan at a time. Once paid back, they have to wait another 30 days prior to applying for another loan.

Some industry players have already entered the Instant credit market in the US. AmEx with GreenSky or BBVA Compass, for instance. Yet, not many companies actually address fragile customer segments, other than through proposing very expensive “payday loans”. U.S. Bank takes one step towards meeting these customers’ needs, and unveils an alternative to overdraft options while betting on simplicity and transparency.