MINNEAPOLIS, Jan. 17 (UPI) -- U.S. Bank and Wells Fargo said Friday they no longer would offer their alternatives to payday loans to comply with regulatory guidelines.
U.S. Bank, based in Minneapolis, said it would wind down its short-term deposit advance product, "Checking Account Advance," to align with the final regulatory guidance issued by the Office of Comptroller of the Currency and the Federal Deposit Insurance Corporation.
"We recognize our customers' need for short-term, small-dollar credit," said Kent Stone, vice chairman of consumer banking sales and support at U.S. Bank. "We are committed to finding new solutions that meet the needs of all of our customers and fit within the current regulatory expectations."
U.S. Bank said it wouldn't offer Checking Account Advance to new checking account customers on Jan. 31 and it would be discontinued for current customers on May 30. The financial institution said customers with outstanding balances would be offered extended repayment terms.
Wells Fargo, based in San Francisco, said new checking account customers won't be eligible for its "Direct Deposit Advance" product beginning Feb. 1. The national bank said there were no immediate changes for existing Direct Deposit Advance customers, who can access the service until mid-year.
In November, federal regulators issued guidelines for banks that provide the payday loan alternatives, saying lenders must assess a borrower's ability to repay.
Based on assets, Wells Fargo is the fourth largest bank in the United States and U.S. Bank is the fifth.