NewsCash Poor Americans Spent $38B In Fees Beyond APR Rates

Cash Poor Americans Spent $38B In Fees Beyond APR Rates

“Cash poor” means having wealth in assets but insufficient liquid money available for spending and saving.

The Best and Worst Options For Cash Poor Americans, According to Report

According to the report, the APR rate does not include late fees, origination fees, subscription fees, transaction fees, or other expenses that create what analysts call “debt traps” for consumers in a financial crisis.

Courtesy of SoLo

Courtesy of SoLo

Courtesy of SoLo

Bank small-dollar loans are a relatively new offering that emerged last year. It had the third-highest costs, just behind subprime credit cards and payday loans. However, there are significant barriers to entry.

“They averaged a 25% borrowing cost this year, with a minimum fee of 12%, largely due to mandatory account balance and deposit requirements,” the report says.

Borrowing can be free for disciplined users who pay on time, but average costs due to tips and late fees can reach up to 17%.

“Being cash-poor is a way of life for most Americans,” said Rodney Williams, president and co-founder of SoLo, who says this way of life creates vulnerability in managing variable and unplanned expenses.

“The vulnerability is not the time for a lack of options but rather an opportunity for innovation and competition. We want Congress and regulators to embrace innovation and allow more convenient and accessible frameworks given the same playing field as traditional financial institutions,” he adds. Read the full report at www.theCashPoor.com

RELATED CONTENT: SNAP Increases Income Eligibility Requirements 

Source: Black Enterprise

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