There has never been a shortage of innovation at Bank of America, a top financial institution. While my personal favorite is the BankAmericard, now Visa International, the firm consistently ranks at the top of financial institution innovation. In 2018 alone, Bank of America filed 318 patents, and according to Business Insider, now holds 3,900 patents and applications. If you have a Bank of America card, as I do, you likely know who “Erica” is, and that “Keep the Change” can make saving money fun.
You can see the results of Bank of America’s efforts in some metrics, such as digital sales, which now account for 29% (Q42019), almost equally split between mobile and desktop, also cited in Business Insider.
Today’s read comes from a Bank of America press release with a solution for payday lending. Payday lending is a challenging space because it is typically the lender of last resort. Rates are usually off the charts, beyond 300% per year, because defaults are high. There is some predatory lending in the space, but despite the rates, payday lending does fill a need when some consumers must pay rent or medical bills.
Bank of America’s new offering, named Balance Assist, disrupts the payday lending model.
- With this new short-term, low-cost loan, Bank of America clients can now borrow up to $500 (in increments of $100) for a $5 flat fee regardless of the amount advanced to their account.
- Repayments would be made in three equal monthly installments over 90 days. To learn more, review these additional product details and eligibility criteria.
- Borrowers must have been a Bank of America checking account client for at least one year. Balance Assist is scheduled to launch in select states by January 2021 and in remaining states early next year.
You must be a Bank of America client to take advantage of Balance Assist, but if you check the OCC, you will find a long history of fair banking access, as measured in CRA audits. At the very least, the banking account could be designated for government benefits checks. Still, if you add features like Keep the Change, low-cost banking with SafeBalance, and secured cards, most households will find options to improve their financial health and well-being.
Bank of America has a long history in banking and a focus on innovation. With Keep the Change, there is no reason not to save money. With Balance Assist, there is now a resource to borrow without getting in a financial hole.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group