Bank of america balance assist loan application

Bank of America, the second-biggest bank in the U.S., launched a program that lets clients take out loans of up to $500. Called “Balance Assist,” it offers small dollar, short term, and low fee loans, which is a relatively unique program among major banking institutions.

Mobile platforms have rolled out similar features in the past. Cash App is offering small-dollar loans on its platform, and Chime’s SpotMe feature automatically loans clients $100 if they overdraft their account. But Balance Assist is relatively unrivaled by traditional banks. Here’s how the program works, and who’s eligible.

BofA Balance Assist

Through Balance Assist, Bank of America clients can borrow $100 increments up to $500. Every loan has a flat $5 fee and will be paid in three monthly installments. While these loans are similar to payday loans, Balance Assist is much better for consumers. Most low-dollar payday lenders charge extremely high fees and can leave consumers worse off. By offering a low, flat fee, Bank of America is essentially offering payday loans at significantly lower interest rates.

“We continue to develop a variety of innovative solutions to help our clients achieve solid financial footing,” April Schneider, head of Consumer and Small Business Products at Bank of America, said in a statement.

Early in the pandemic, a joint group of federal and state organizations penned a letter urging banks to offer more responsible small-dollar lending options. The letter, which came from the Consumer Finance Protection Bureau, the FDIC, and the National Credit Union Administration, among others, said:

The agencies recognize the important role that responsibly offered small-dollar loans can play in helping customers meet their needs for credit due to temporary cash-flow imbalances, unexpected expenses, or income short-falls during periods of economic stress or disaster recoveries.

To be eligible, clients must have had a Bank of America checking account for at least one year. In addition, the bank will consider clients’ banking info and credit history to evaluate eligibility.

The Bottom Line

The Balance Assist program is positive for consumers, and other banks may follow suit in the future. If nothing else, consumers now have reasonable alternatives to payday loans if they need cash relief fast.

Another alternative to payday loans:

OppLoans – Get a personal loan fast (up to $4,000) even if you have bad credit. Only for residents of FL, AL, AR, AZ, DC, DE, GA, HI, ID, IN, KY, KS, LA, ME, MI, MN, MS, MO, MT, ND, NE, NV, NM, OH, OK, OR, RI, SD, TN, TX, UT, SC, WA, WI, WY, or VA

To review Bank of America’s Balance Assist loan, NerdWallet collected more than 30 data points from the lender, interviewed company executives and compared the lender with others that seek the same customer or offer a similar loan product. Loan terms and fees may vary by state.

In late 2020, Bank of America introduced its new small-dollar loan, Balance Assist, which allows customers to borrow up to $500, in $100 increments, for a flat $5 fee. The loan is then repaid over a 90-day period via three equal monthly installments.

To be eligible for Balance Assist, you must be a Bank of America customer with a checking account that’s been open for at least a year. Customers can apply online or with the bank’s mobile app.

Bank of America is part of a small but growing list of mainstream banks that are offering short-term loans as alternatives to high-interest payday loans. Though these loans are a quick and convenient way for customers to handle an emergency expense, some carry high interest rates.

Balance Assist stands out for its flat fee structure that allows relatively low rates, no matter how much is borrowed.

Bank of America Balance Assist at a glance

• Reports payments to all three credit bureaus.

• Doesn't offer triple-digit APRs.

• No late, origination or prepayment fees.

• Not available in: California, Florida, Georgia, Massachusetts, New Jersey, New York and Texas.

• Funds loans the same day.

• Doesn’t have an explicit hardship plan.

• Clearly discloses costs, fees and repayment term on website.

• Website includes loan example with total interest and payment.

• Offers mobile app to manage loan.

Bank of America Balance Assist details

To apply for Balance Assist, you must be a current Bank of America customer with a checking account that’s at least one year old. Your account should show regular monthly deposits and maintain a positive balance.

According to the lender, approval is based on three factors: your credit profile, your relationship with Bank of America and the information listed on your application, like your annual income. Bank of America doesn't disclose its minimum credit score requirement.

Customers can take out one Balance Assist loan at a time. Once you've repaid the first loan, you must wait 30 days before applying for another. There is no limit to how many Balance Assist loans you can take out in one year.

As part of the application, Bank of America will conduct a hard credit inquiry, which is standard for most loan approvals. This can lower your credit score by a few points and stay on your credit report for up to two years.

According to the lender, applicants should know within minutes whether they’ve been approved.

The Balance Assist loan carries a $5 fee, no matter how much you borrow. This means the annual percentage rate will vary based on the loan amount.

For example, if you borrow the minimum of $100, the loan will carry a 29.76% APR. If you borrow the full $500, it will carry a 5.99% APR.

Balance Assist is a significantly cheaper option than a payday loan, which carries an average rate around 400%. The 90-day repayment term is also longer than the two-week repayment term offered by most payday lenders.

There are no prepayment fees for paying off your loan early or late fees for missing a payment. The lender also doesn’t charge overdraft or insufficient fund fees for a Balance Assist payment. However, missed payments can be reported to the credit bureaus, which could hurt your credit score.

Loan example: A $400 loan with an APR of 7.50% repaid over three months would carry:

How Bank of America Balance Assist loan compares

Even with a $100 loan, Balance Assist rates don't exceed 36%, which most consumer advocates consider to be the maximum limit for a loan to be affordable.

Other options for small-dollar loans include personal loans from credit unions, which may be especially affordable for borrowers with fair or bad credit scores. Credit unions tend to offer lower interest rates, flexible terms and more lenient criteria for applicants, and many have a small minimum loan amount. You will need to become a member before applying.

Other lenders cater specifically to applicants with bad credit or no credit history, but will likely carry a higher APR than Balance Assist.

Bank of America Balance Assist isn't a good idea if:

• You're trying to build credit: There are other ways to build credit over a longer repayment term, including a secured credit card (which Bank of America offers), a credit-builder loan or paying off existing debt. If you don't know your credit score, get it for free on NerdWallet.

• You struggle to budget: The $5 fee may be affordable for most customers, but not if you ultimately can’t make the monthly payments. Add the three installments to your budget before applying to ensure you can comfortably repay the loan over the 90-day period.

• You can get cash elsewhere: Paying with cash is always cheaper, even if the cost to borrow isn't high. Consider ways to earn extra money, or form a lending circle with friends or family.

  How do you get approved for balance assist?

  How to apply for a Bank of America Balance Assist loan.

  You have a qualified Bank of America checking account that's been open at least a year..

  All of your checking and savings accounts are in good standing..

  You don't have an existing Balance Assist loan, and haven't had one in the last 30 days..

  Why am I not getting approved for balance assist?

  If your checking account is already overdrawn, you're not eligible. Even if you're listed as a joint account owner with someone else, if they overdraw the account, you're still not eligible. Monthly deposits. You need to have regular monthly deposits into your checking account to be eligible.

  How do I use Bank of America balance assistance?

  How Does Balance Assist Work? Balance Assist allows eligible Bank of America customers to borrow in increments of $100, up to $500. You will complete a loan application online, and if it's approved, you should receive your funds in minutes. Each time you borrow money, you pay a $5 flat fee.

  What credit score do you need for balance assist?

  Bank of America offers a short-term loan called Balance Assist, which allows customers to borrow up to $500 for a $5 flat fee. ... Compare to Other Lenders..