Millions of people with low wealth need opportunities to build savings and assets. Without these opportunities, many have no alternative but to turn to predatory lenders when they need cash to pay for unexpected emergencies.
A study from Alliant Credit Union and The International Society of Certified Employee Benefit Specialists found that 55 percent of American workers are living paycheck to paycheck, with only one or less of their equivalent paychecks in savings to handle any financial emergency that may occur.
Many employees have financial needs that require assistance in the present; planning for longer term, such as for retirement or health savings are beyond their reach. Over 80 percent indicated they do not feel financially secure.
FDIC’s 2009 “Survey of Unbanked and Underbanked Households” reports 9 million households (7.7%) are unbanked and another 21 million (17.9%) are underbanked. Approximately 60 million adults reside in these households.
Many of these individuals need a first or second chance to build productive credit and manage a transaction account. Without these opportunities, they are often at the mercy of costly service providers, such as check cashers, payday lenders, refund anticipation lenders, and remittance providers. These services are stripping $16 billion out of the pockets of consumers each year in the way of fees.