Wells Drops Pricing on Credit Advance: Now only Super Expensive

Wells Fargo has dropped the fees for its Direct Deposit Advance line of credit.

The Direct Deposit Advance is a short-term cash advance available to Well’s checking account customers (in good standing) in about 15 states.

Wells charges $1.50 for every $20 increment that a customer is advanced. The line of credit has to be cleared within 35 days. The term is in most cases much shorter, as Wells draws from the next direct deposit. Assuming that a customer takes out the advance at the moment after they get their direct deposit, the APR comes to 77 percent. In the much more likely scenario that they draw on the account toward the end of the month, the APR skyrockets. For a two-week draw, the APR is 192 percent and for a 5 day draw it is  540 percent.

As high as the fee is, it is lower than the products offered by competitors and lower than Wells’ pricing when they first introduced the advance. Fifth Third’s Early Access prices their advance at $1 for every $10.

The OCC is seeking comments on these products. Comments are due by July 8th.