Wells Fargo’s Direct Deposit Advance

February 27, 2006

I was just on the Wells Fargo website looking at my bank account and I noticed something called Direct Deposit Advance so I clicked on it. Apparently if you have your paycheck direct deposited into your account and times get tough, you can ask for an advance. I WOULDN’T RECOMMEND IT THOUGH. It is quite expensive since they charge $2 for EACH $20 they advance you. That’s a 10% fee! It’s best to manage your money properly.

21 responses to Wells Fargo’s Direct Deposit Advance

  1. Look out Check Into Cash, Wells Fargo is going into the Payday Advance business! This is certainly a sign of bad times financially for most Americans! Not long ago, payday advance loans were the domain of the seedy underground, barely more legitimate than your neighborhood loan shark and his trusty baseball bat. Now Wells Fargo has joined the party.

  2. If you figure out the Annual Percentage Rate on these loans they can range from 200 to up to 1000
    percent if you only need the money for only a couple of days. I hear people complain when their
    credit cards APR is over 15%. If you give someone a shovel to dig themselves deeper into a hole
    (you should be have some responsibility for the hole they dig)

  3. I need to go into this business.

  4. Oh way back in the day I used to do this. $20 here, $40 there. It’s a VERY bad idea. But it’s been around for at least 6 or 7 years. A smarter, older, wiser mapgirl knows better now. I’d never do this now.

  5. Dear God…

    (Seriously, I thought this was a joke!)


    (Walks away, shaking his head…)


  6. eeeeeeeeeeeeeeeeeevil….

  7. I’ve used this feature twice, when a sudden illness wiped out my savings. I felt ‘better’ than using a credit card because I automatically paid out of my paycheck, so I wouldn’t ‘owe’ anything later on. I do agree this is very very bad for those who chronically borrow from Peter to pay Paul and back again, but if you look closer, Wells Fargo does limit you should you try and be chronic borrower. Sucks at all to have to use this service, but for me, it was an unfortunate necessity.

  8. I agree it is better to manage your money better. I had to use this once because the timing belt went on my car. The charge is outrageous, but I would rather have it there and not use it than not to have it.

    I just can’t imagine being one of the shmoes who continually takes money from this “advance”.

  9. Wells Fargo has nearly no risk of any loss for this service since they only offer this if there is an established direct deposit. This being the case they could offer this service for much less than $2 per $20 and still make money. Instead they choose to charge an effective 120% APR. Sounds like greed to me.

  10. Considering that Money Tree, last I checked (which was years ago) was charing an APR well over 200%, I say kudos to Wells Fargo for charging a significantly less amount. It’s a ripoff ONLY if you don’t pay it back within a timely manner. If you pay it back as soon as possible, it’s actually better than some loans for short-term money needs. Check N Go charges $25 for every hundred dollars; compare that to Wells Fargo’s $10 for every hundred and you see what I mean. Besides Wells only does this when they can verify that you have Direct Deposit and never to exceed the amount of your monthly deposit – no more than $500 in California. I think it’s fair.

  11. RVLTD is just plain wrong. Wells Fargo deserves no Kudos. First, WF started these programs when a bulk of direct depositors were recipients of federal benefits checks — Social Security, Veterans Affairs disability, retirement pensions and so on. So they were skimming their riches from the poor.

    Second, there is virtually NO RISK to WF. Interest rates are supposed to be related to risk. It’s called risk-based pricing of credit. Because only account holders can get the loan, and because these account holders are direct depositors, WF has almost no risk.

    The fact of the matter is that some of these loans are for 1, 2, or 3 days. Others are for up to two weeks. At $1 per $10 (or $10 per $100 as the payday lenders would say), that works out to:
    1 day “advance” loan: 3650% APR
    2 day “advance” loan: 1825% APR
    3 day “advance” loan: 1217% APR
    1 week “advance” loan: 521% APR
    2 week “advance” loan: 261% APR
    So this is worse than the purported Money Tree rate.

    Finally, the fact that one lone shark charges a fee that is nominally less than another loan shark does not convince me that either is engaged in sound and principled business practices. One more thing … the Refund Anticipation Loans are now in their seasonal “en vogue.” These are also a total ripoff and, if one should need $$$ fast, time to file electronically with the IRS is next Tuesday so you can get your refund DIRECT DEPOSITED sooner than later. For more information on predatory loans, both in the small loan context and mortgage, visit the Center for Responsible Lending’s website.

  12. Clarence, Clarence, Clarence…. You seem to know your facts, but they simply aren’t complete facts. Refund Anticipation Loans cost between 3% and less than 5% of the amount requested. Clearly way less than payday lenders charge. Critics (you?) and consumer advocates (you?) love to tack on every fee, such as tax preparation fees, to concoct their inflated APR when whining about RALs. Whether you take a RAL out or not, tax preparation is a necessity for many Americans simply because the tax code is complex. That is a separate and distinct subject. Then of course Regulation Z (overseeing APR calcs) was devised for just that – “loans over one year”. It is not conducive for short term lending. In the case of RALs it requires a lender to state the APR as if the laon were being paid off every 11 days for a year (or 33 times). That’s not the case. Its paid once. But national banks must adhere to Reg Z in order toexport rate. No one ever bothers to say RALs are low cost compared to many credit options for cash constrianed Americans (if they even have another option). BTW/ many don’t even have bank accounts to “direct deposit” into as you suggest. Simply telling people to “wait” for their money means you’ve never walked a mile in many of these customer’s shoes. Neither the IRS, consumer groups (or even you) can lend money at these rates…nor do they offer to. But the fact is, while RALs aren’t for everyone, the “need” for many still exists. Learn all the facts (which there are many more).

  13. I think the direct deposit advance is great for people like me that get paid once a month. Even if I am charged a fee. I don’t mind.

  14. Michelle, Direct Deposit Advance is an extremely expensive form of credit. You need to budget better and pay all your bills when you get paid. Otherwise you will get caught in this trap of sucking away much of your take home pay on a loan that will never be paid off. I should know – I was stuck in this cycle for over a year. I paid $1200 in interest that year for a $500 advance.

    Please, reconsider your willingness to use this awful service.

  15. I work for Wells Fargo. While I agree that the APR on the Direct Deposit advance service is pretty steep, I always try to remind my customers that the service should be a temporary fix and I recommend OPTIONS. FYI, Wells Fargo will revoke the service for misuse(consecutive cycles), or mishandling of an individual’s accounts.

    Those who are booooing the service…I agree, it is a big amount to pay; however, nobody forces anyone to take out a direct deposit advance so people are ultimately responsible for managing their money. I agree with another author who said that they would rather have the service available and not use it, than to not have it at all in case of an emergency.

  16. Direct Deposit Advance has saved my butt at least a dozen times.

    Like a previous poster said, it’s not like swiping a credit card and owing that $ for years to come. It’s paid with your next deposit.

    Sh*t happens, and if it does I know I have a small credit limit with my bank to back me up.

    Habitually it could cause problems I agree, but to me I’d rather ask Wells Fargo for a pay day advance rather than call my poor old Grandma again.

    It’s nice to have a bank on your side!

  17. How dare Wells Fargo offer a service (in a list of services) to us customers. HOW DARE THEY!! (shakes fist).

    Now that I’ve gotten that out of the way. Remember, this is the best kind of debt. It’s immediately repaid. I think it’s great.

    Kudos to WF! You make my life less stressful and my friends and family happy when I don’t need to lean (or lien) on them for help.

  18. Taking a $200 direct deposit advance (which is available immediately upon approval of the request) with a service fee of $20 is MUCH cheaper that the $35 per item overdraft fee….I’ve used it a couple of times when there have been errors in my check register, and it saved me hundreds in overdraft fees…

  19. I agree. Managing your money properly is obviously what everyone needs to do but s*** happens. It is a ridiculous charge but if you get in a jam at the end of the month the $2.00 per $20 fee is a heck of a lot cheaper than the $35 per event OD charge. I notice that folks did a lot of cyphering to show the interest rate the $2.00 per $20 actually represents. Try that same math with a $35 fee on a $20 ATM Withdrawal.

    All banks rape people with OD charges. I think most actually like people to OD their account these days….great revenue stream. At least WF gives people an option.

  20. I split my direct deposit 50/50 between Wells Fargo and US Bank. This way, I have more than the $500 DDA limit available – at any given time.

    By using both banks, I have more than 1 full paycheck of NET PAY in DDA available at any given time.

    The DDA is less expensive than a PAYDAY LOAN and most banks are willing to provide a repayment term of over 30 days. Most PAYDAY loan companies provide terms of 14-18 days.

    Most banks will let their customers work with the collections department and create easy payment options in order to keep the account open and active.


    Before becoming eligible for a DDA,
    US Bank FORCES all customers to wait 6 months after opening the checking account.
    Wells Fargo is quite lenient in comparison; DDA is available after a MERE 2 months.

  21. I have used this service more than I would like, and I have to wonder if I would manage my money better if this option were not available to me?