Payday loans are usually only offered by specialized lenders.
Banks, on the other hand, are traditional financial institutions and generally only offer traditional loans like personal loans and mortgages which have more stringent requirements than payday loans.
Learn: Where can I get a loan until payday?
Traditional banks have many financial products that are heavily regulated by government agencies and they typically do not deal in alternative lending options like payday loans. Payday lending is what's known as a "subprime lending" (i.e., lending for borrowers with bad credit) and operates under very different regulations. This type of lending is high risk and considered controversial by many, and banks do not dabble in this arena.
Learn: Can I get a payday loan with Chime bank?
However, banks haven't miss out entirely on the payday lending game! Many banks today offer short-term loan products that are very similar to payday loans, but they tend to go under the name "small dollar loans" or "deposit advances"— skillfully circumventing the tarnished reputation attached to payday loans.
With a deposit advance, banks and credit unions will automatically pay themselves back once a deposit is made into your bank account (no matter the source) — no income verification required! So, if your birthday is coming up — and you know grandma's birthday money is right around the corner 😏 — the bank will take your sweet five bucks to pay down your loan. 👵🥺
Learn: How do payday loans work?
I would also advise you to exercise caution with this kind of borrowing. Most types of small-dollar loans (e.g., payday loans, personal installment loans, title loans, etc.) are considered risky because of their high cost.
It's important to remember that these loans are designed to assist with short-term financial situations and, in order to be effective financial solutions and not drain your wallet, they should not be held beyond their term.
