Review of Small Dollar Loans by Bank of America

Jan 27, 2024 By Susan Kelly

Borrowing with Balance Assist is possible for qualified Bank of America customers in $100 increments, up to a maximum of $500. You can apply for a loan online, and if granted, the money will be deposited into your account within minutes. There is a $5 service charge added to each loan.

Extensive Analysis of the Bank of America Balance Assist

NerdWallet gathered over 30 data points from Bank of America, spoke with company executives, and compared the company to others who target the same customers or offer similar loan products to write an in-depth evaluation of the Balance Assist loan. State laws and regulations affect the specifics of a loan.

Balance Assist, a new type of small loan offered by Bank of America in late 2020, lets consumers borrow up to $500 in $100 increments for a fixed price of $5. The loan is paid back in three equal monthly payments over ninety days.

Provision Of Short-Term Loans

Balance Assist is only available to Bank of America checking account holders who have had their accounts for at least a year. The bank accepts applications via its website and mobile app.

Bank of America is among a select group of large financial institutions that provide services similar to payday loans but with lower interest rates. These loans are a fast and simple solution for customers to deal with sudden expenses, but they often come with exorbitant interest rates.

Balance Assist stands out from the competition because its flat charge structure permits relatively low rates regardless of the amount borrowed.

The needed amount of a loan

You must be a current Bank of America client with an active checking account at least a year old to be eligible for Balance Assist. Money should be deposited into the account monthly, and the balance should stay positive.

A borrower's chances of being approved by the lender are triangulated between the applicant's credit history, the applicant's existing relationship with Bank of America, and the applicant's stated financial circumstances, such as annual income. The bare minimum credit score required to open an account at Bank of America is unknown.

Loans with a Balance Assist

Customers can only have one outstanding Balance Assist loan at any given time. There is a 30-day waiting period after the initial loan is paid off before the next one may be requested. No annual cap is placed on the number of Balance Assist loans that can be taken out.

Bank of America will check your credit history as part of the loan application process. This may harm your credit score and remain on your record for up to two years.

The Price of Credit

A $5 fee is applied to all Balance Assist loans, regardless of the amount borrowed. This means that the APR will be different for different loan amounts.

For instance, if you borrow the minimum amount of $100, the annual percentage rate (APR) will be 29.76%. The annual percentage rate (APR) for the full $500 loan is 5.99%.

Help with the Balance Payment

Compared to the typical APR for payday loans (about 400%), Balance Assist is a much more affordable solution. The repayment period of 90 days is also significantly longer than the repayment period offered by most payday lenders (about two weeks).

There are no costs associated with paying off the loan early or being late on payments. The lender will not assess any overdraft or insufficient money fees for payments made using Balance Assist. However, credit bureaus may learn of missed payments, which can hurt credit scores.

Analyzing the Balance Assist Loan from Bank of America

Balance Assist's interest rates never go over 36%, the upper level that consumer advocates consider tolerable even for a $100 loan.

Credit union personal loans are another alternative for borrowers with average or below-average credit to obtain a small loan amount. Many credit unions have low minimum loan amounts, more accommodating lending terms, and applicant requirements. First, you'll need to join the club before you can apply.

You're trying to build credit.

Refrain from using Bank of America Balance Assist if you attempt to establish or improve your credit. A secured credit card (like the one offered by Bank of America), a credit-builder loan, or even just paying off existing debt can all help you establish credit over a longer repayment period. Check it out for free on NerdWallet if you need help determining your credit score.

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