For many Americans, living from paycheck-to-paycheck is a fact of life.
Saving a bit of money at the end of the month in order to afford the next month's rent is typically a significant financial challenge.
Other bills such as cars, power, insurance, phones and internet connectivity require payments that need to be timed delicately in order to avoid penalties such as late fees or service shut-offs.
Then groceries, gas and maybe even a bit of entertainment add to growing monthly budgets.
For many people, rising credit card debt creates more pressure on their ability to make those payments.
In inflationary times, these items taken together can add up to a serious percentage of a household's monthly expenditures.
So what happens in cases of emergency? Where does one look for help if a car breaks down or an appliance repair needs to be made?
For some, one solution is a short-term loan, sometimes referred to as a payday loan or as a cash advance. Unfortunately, these loans are often associated with high interest rates, which ultimately add to a household's struggles by making them difficult to pay back.
One Bank Offers a Possible Solution
Wells Fargo (WFC) is unveiling a new short-term loan that it says will provide an answer to this dilemma. The bank calls it "Flex Loan."
The concept is simple. Instead of a high interest rate for short-term loans, or any interest rate at all for that matter, Wells Fargo has decided to offer its customers a flat rate.
The loans are available to existing Wells Fargo customers and are offered in amounts of $250 (for a flat $12 fee) or $500 (for $20). The company says the loans involve no hidden fees or late charges.
"Our customers are at the heart of everything we do. Flex Loan is Wells Fargo’s latest innovation to give customers peace of mind and flexibility as they manage their daily finances," said Abeer Bhatia, head of Personal Lending and Retail Services for Wells Fargo, in a press release. "What makes Flex Loan different from other payment options is its certainty of approval for eligible customers, the simplicity of obtaining funds in minutes, and clarity around how much it will cost to pay for things like holiday gifts, travel, or an unexpected home or car repair expense."
Wells Fargo says the loans will be available in its mobile app, and emphasizes that the customer experience for obtaining the loans will be seamless and easy.
How Flex Loans Will Be Accessed
Users will first locate the offer in the app. When a customer accepts the loan and agrees to a plan for repayment, the funds will be immediately deposited into their bank account. Customers will then be able to use their debit cards to make purchases or payments instantly.
The repayment plan is set to be payable in four equal monthly installments.
"Unlike other often costlier options, Flex Loan offers an affordable, transparent way to manage a short-term cash need -- while providing convenient and nearly instant access to funds," the company says in its press release.
The short-term loans are accessible today in select markets and are promised to be available nationwide by the end of December.
