Fifth Third Unveils 260% APR Payday Advance Product

Under the guise of helping consumers with low balance bank accounts avoid fees, Fifth Third Bank is now offering a new product based on a current account feature called Early Access.

The new product, MyAdvance, allows customers to take out an advance of between $50 and $1000 against their next direct deposit. Based on the fees or rates charged for Early Access, customers would pay a 5% fee for advances taken out in the first 18 months of using the product and 3% thereafter. These numbers represent an effective APR of 260% if an advance is taken one week before payday.

Laura Alix offers more in American Banker:

The $207 billion-asset Fifth Third will give customers extra time to replenish balances before an overdraft penalty is charged, post direct deposit payroll funds earlier than before and make advances against future direct deposits for a fee.

The new product will have a feature called MyAdvance, which allows customers to take out an advance of $50 to $1,000 against their next direct deposit for a fee. Fifth Third had previously offered this feature under the name Early Access, and it had only offered it to those customers who had been with Fifth Third for at least a year. The newer iteration will be available to Momentum checking customers after two direct deposits.

While taking an advance against a direct deposit could minimize overdraft fees, it also carries a relatively high APR — 260%. The move comes as the…