U.S. Bank Simple Loan: 2019 Review

When to consider: In a true emergency after you’ve explored other options.

U.S. Bank became the first mainstream bank to offer small-dollar loans as an alternative to online or storefront payday loans in 2018. The Simple Loan is a short-term loan repaid with three monthly installments. It's available to customers who have U.S. Bank checking accounts.

U.S. Bank's Simple Loan is a fast way to handle emergency expenses under $1,000 if you have bad credit (below 630 FICO) or no credit history, but it is an expensive form of credit when you need quick cash. NerdWallet recommends exploring your alternatives before taking it.

Qualification: To qualify, you have to be a U.S. Bank checking account customer for at least six months and have your paychecks directly deposited into your account for at least three months.

You can take one loan at a time, and you cannot take another loan for 30 days after the first one has been paid off. With payday loans, there is no "cooling off" period between loans; lenders allow borrowers to roll their loans over for a fee, which often leads to a cycle of increasing debt.

U.S. Bank conducts a hard pull of your credit when you apply, which can temporarily ding your credit score.

Cost: The Simple Loan costs $12 for every $100 borrowed, which translates into an annual percentage rate of 71%. That’s much cheaper than typical payday loans, where the average rate is 391%, and it’s repaid over three months, not the two-week cycle that is common of payday loans. There are no origination fees, late fees, missed-payment fees or prepayment penalties.

Auto-pay discount: U.S. Bank allows both auto-payments and manual payments. Manual payments cost extra, $15 per $100 borrowed, which is equal to 88% APR. Payments are reported to the credit bureaus, so your score can increase if you make on-time payments.

Loan example: A $500 loan with a repayment term of three months at 71% APR would carry:

• Monthly payments: $186.77.

• Total interest: $60.30.

• Total amount due with autopay: $560.30.

• Total amount due without autopay: $575.06.

The bank also offers a Premier personal loan and lines of credit for larger amounts with longer repayment periods.

How U.S. Bank Simple Loan compares

U.S. Bank’s loan rate is slightly higher than Oportun, a payday alternative lender that lends to people with low credit scores or no credit history. Oportun’s rates top out at 67%. It makes loans at physical locations as well as online, and does not conduct a hard credit pull.

Other online lenders that offer alternatives to payday loans, such as LendUp and Rise, have much higher rates.

U.S. Bank Simple Loan is not a good idea if:

• You are trying to build credit: A secured credit card, credit-builder loan or paying off existing debt are faster and cheaper ways to build credit. See ways to build credit, and if you do not know your score, get your free credit score on NerdWallet.

• You can get cash elsewhere: NerdWallet recommends exhausting cheaper alternatives first, even in an emergency. Take the quiz below to explore your options:

Before you take a Simple Loan

1. Try all other options: If none of the alternatives listed above work for you, see if you can buy time from your creditor, work out a payment plan or face the short-term financial consequences of not paying, such as a late fee.

2. Compare the cost of taking the loan to the cost of not taking it: Calculate the overall cost of not having funds for your purpose, then weigh that against the typical cost of a Simple Loan in your state.

If you take a Simple Loan