Wells Fargo, US Bancorp and Fifth Third Bancorp are planning to stop offering their direct deposit advance products in order to meet the new rules issued by the Office of Comptroller of the Currency (OCC) and the Federal Deposit Insurance (FDIC).
Deposit advance loans allow customers to borrow money without any fear of making future deposits in their current accounts.
Wells Fargo plans to stop offering its direct deposit advance service for the new consumer current accounts opening after 1 February 2014, and will offer the service for existing customers until mid-2014.
US Bancorp plans to discontinue its products for existing customers on 30 May 2014 and customers with outstanding balances at that period will be offered extended repayment terms.
US Bank consumer banking sales and support vice chairman, Kent Stone, said they recognise their customers’ need for short-term, small dollar credit.
"We are committed to finding new solutions that meet the needs of all of our customers and fit within the current regulatory expectations," Stone added.
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Fifth Third Bancorp said it no longer would enrol new customers into the so-called Early Access product after 31 January 2014 and will phase out the service to existing customers by the end of 2014. It also plans to offer alternative products by early 2015.
Consumer Bankers Association CEO, Richard Hunt, said forcing banks out of the business limits options for consumers and pushes them towards payday lenders and fly-by-night entities.