Fifth Third Bancorp has lowered fees and eased terms on short-term, small-dollar loans as it awaits clearer guidance from regulators on the product's future.

Consumers who have already enrolled in the Cincinnati company's Early Access deposit-advance product will be automatically switched to the new terms starting Jan. 1. New customers will not be accepted into the program.

The $134 billion-asset Fifth Third had previously said it would completely phase out the deposit-advance loan product by the end of this year because of widespread concerns about the fairness of such products. Fifth Third hopes the more-consumer-friendly terms will be acceptable to regulators.

"It makes sense to keep customers within the traditional banking system, rather than pushing them into less-regulated providers outside of it," said Larry Magnesen, a Fifth Third spokesman.

Starting Jan. 1, Early Access fees will fall to 3% from 10% per transaction. The repayment deadline will be extended by 10 days to a total of 45 days. Customers will be allowed to take out loans up to the maximum of their qualified credit limit for three straight months, down from six months currently. Consumer advocates have said that rollover features of payday loans trap borrowers in a cycle of debt. Fifth Third does not levy an interest rate on Early Access loans.

If regulators decide to allow banks to permanently make short-term, small-dollar loans, Fifth Third would not "offer any service that would be less favorable than the terms or conditions" of the revised product, Magnesen said.

Magnesen declined to say how many Fifth Third customers are enrolled in Early Access.

Fifth Third does not know when regulators will issue guidance on short-term loans, Magnesen said.

"We hoped we would have had [the guidance] by now," Magnesen said.

Other banks, including Wells Fargo and U.S. Bancorp, stopped offering deposit-advance loans in January after regulators pressured banks to get out of the business.

Fifth Third began offering its small-dollar loan in September 2008. The loans are available in all the bank's markets, except Georgia, North Carolina, Pennsylvania and West Virginia.

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