A free advance of $ 100? Timely consumer lender tries the idea


Banks regularly charge $ 30 to customers who overdraft their accounts. Now, a Silicon Valley company is considering offering a free service aimed at avoiding these high fees.

US consumers who link their bank accounts to Oportun will receive SMS alerts when their balance drops below $ 100, along with the option to receive a cash advance of up to $ 100. The funds will be refunded without interest once the account is replenished.

“It’s a safety net for your checking account,” Oportun chief executive Raul Vazquez said during the product rollout in San Francisco this week.

Unlike many Bay Area fintechs, the privately held company operates a multi-state network of more than 270 stores. It has loaned more than $ 5 billion to more than 1.1 million customers since its inception in 2005.

Vazquez said in an interview that the new product will be available to a limited number of consumers in May, and more widely in the second half of the year.

He recognized that the offer is a kind of experiment. “We want to make the product simple and easy to use, and then learn as much as possible,” he said.

A big question is whether Oportun can recoup the costs of a free cash advance. The San Carlos, Calif., Company is hoping some of the product’s users will eventually take out a good loan.

Vazquez said he is not afraid of cannibalizing existing demand for Opportunity loans. Loans, which range from $ 300 to $ 8,000, are frequently used to pay for large unforeseen expenses or planned purchases.

Meanwhile, while a $ 100 cash advance may not be enough to cover an auto repair, it could help bridge a gap in the timing of a paycheck and when monthly bills are due.

“They focus on solving very different use cases,” Vazquez said. “This is not a zero sum game.

The product will be available to American adults whose checking accounts show three months of incoming deposits of at least $ 1,000.

Oportun is one of many companies looking to resolve disparities in consumer cash flow – a predicament that can result in repeated overdraft fees or high cost payday loans. Others are trying to fix the problem, including FlexWage, Earnin, and Even.


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