Bank of America Small-Dollar Loan: 2021 Review

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

Jackie VelingFeb 22, 2021
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Our Take

The bottom line: Balance Assist, Bank of America’s small-dollar loan, is a solid option for customers in a bind who can afford the monthly payments.

Bank of America Balance Assist

Bank of America Balance Assist

Min. Credit Score

None

Est. APR

5.99 - 29.76%

Loan Amount

$100 - $500

Pros & Cons

Pros

  • No prepayment or late fees.

  • Reports payments to all three major credit bureaus.

  • Offers small loans up to $500.

Cons

  • Must be an existing bank customer.

  • No co-sign, joint or secured loan options.

  • Only 90-day repayment terms available.

Compare to Other Lenders

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NerdWallet rating 
NerdWallet rating 
Est. APR

6.95 - 35.99%

Est. APR

5.44 - 35.47%

Loan Term

3 to 5 years

Loan Term

3 to 5 years

Loan Amount

$1,000 - $50,000

Loan Amount

$1,000 - $50,000

Min. Credit Score

580

Min. Credit Score

580

Compare estimated rates from multiple lenders

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Full Review

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

Credit building

  • Reports payments to all three credit bureaus.

  • No pre-qualify option.

Affordability

  • Doesn't offer triple-digit APRs.

  • No late, origination or prepayment fees.

Loan flexibility

  • 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.

Transparency

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

  • Website includes loan example with total interest and payment.

Customer experience

  • Offers mobile app to manage loan.

Bank of America Balance Assist details

Loan requirements

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.

Loan costs

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:

  • Total interest: $5.

  • Total amount due: $405.

  • Monthly payments: $135.

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.

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