U.S. Bank Simple Loan: 2020 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 option when you need quick cash. NerdWallet recommends exploring your alternatives before taking it.

Qualifications: 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 $15 for every $100 borrowed and is repaid in three monthly installments. That translates to an annual percentage rate of about 88%. For borrowers who set up autopay, the fee is $12 per $100, or a 71% APR.

That’s much cheaper than typical payday loans, where the average rate is above 300%, 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 on the U.S. Bank Simple Loan.

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 another personal loan and lines of credit for larger amounts with longer repayment periods.

How U.S. Bank Simple Loan compares

Because the Simple Loan is available only to existing customers, U.S. Bank can assess a borrower's ability to repay based on its relationship with a customer, which isn't possible with other online lenders. Though its rates exceed 36%, which most consumer advocates consider to be the maximum limit for a loan to be affordable, this loan is more affordable than other high-interest loans.

OppLoans, for example, offers higher loan amounts than U.S. Bank, but they come with higher APRs, too. The lender doesn't check your credit score when you apply for a loan, but it does report payments to all three credit bureaus on most loans.

Oportun's loans have lower APRs than the Simple Loan and the lender doesn't require that borrowers have a credit score. The company prides itself on helping consumers build credit. Borrowers can get a larger loan with an APR of up to 36%.

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