Hello,

We're thinking of doing a loan benefit for our employees. The idea right now is a low limit credit card offered to employees without a credit check. The idea is this is a nice option for some employees to potentially build credit, and also as a way to get employees to start using some of our services, get familiar with online banking, etc.

Has anyone had experience with doing something like this? Any pitfalls or things to be aware of? Obviously, regulations still apply (reg B, reg Z, etc.). A couple of specific questions we're having:

1. Can we tie the card to employment since it is an employee benefit? If the employment is terminated for any reason, the card would become immediately due, and the balance would be taken out of the final paycheck.

2. Can we use internal employment information in determining to grant the card? We're not pulling a credit report, but say the employee is on a final written warning - could we use that to decide not to offer the card?

1. Sounds a little draconian and you would need to check State and Federal labor laws. Why not just have it revert to a normal consumer card in your portfolio.

2. If this is considered an official employee benefit, then again, labor laws will come into play as to selecting employees that are eligible.

Might be worth a conversation with your employment attorney.

We used to offer something in line with this idea years ago, and similar to Randy's post, it was converted to a consumer loan if an individual left the company. We no longer offer this to employee's though.

IMHO you are making more work for yourself. If one of the goals is to help younger and entry level staff develop credit, tell staff we have a great credit card program here at XYZ bank and the proper use of it is a great way to build or repair your credit. If you are intending to give the card to EVERY employee who applies for it regardless of poor credit or none, just approve them as an exception to policy. Tying the card to their employment isn't a good idea.

Original Anon here. We have run it by an employment attorney and gotten the green light. The problem is the employment attorney is not also an expert on the banking rules/regs.

Specifically, I'm wondering if there is something in the FCRA that would prevent us from using their employment history with us in deciding whether or not to open the card.

the above is a sound point...


i think you're going to have a hard time selling this as an "employee benefit" if you don't offer to all employees. and what happens at the end of employment if the balance is higher than their final paycheck? should people in your bank that are extending credit be aware that an employement is on a final qarning? that sounds like a huge HR issue. do you ask other prospective borrowers if they are on final warnings at their place of employment? sounds almost discriminatory to me...


yeah, i'd suggest you need to find another attorney that can advise you on this, because this really isn't an employment issue, it's an extension of credit issue.

and sounds like a headache as well

If you don't plan on making this an employee program, how will you treat non-employees that apply? If employee applications are approved as exceptions and others are declined, how will you show the reason for the exception? The employee flag will need to be captured somewhere.