Survey Highlights Important Role Small-Dollar Credit Plays for Americans
According to Bankrate’s January 2020 Financial Security Index study, just 39 % of American households are able via savings to cover a $1,000 emergency expense, such as a car repair. The 2021 version of the survey found that just 41% could cover such a cost.
AFSA has long pushed for policies and initiatives that help Americans save their hard-earned money. The AFSA Education Foundation’s Money$kill program has modules designed to provide tools and resources to help consumer save.
However, the Bankrate survey, along with recent surveys from the Federal Reserve and Pew, show that Americans have not saved for emergencies and that borrowing is an important part of consumers’ toolbox, one that policymakers need to preserve.
The survey found that: 18% of respondents would use a credit card, another 18% could meet the expense by scrimping on other items in their budgets, 12% could borrow from friends or family, and 8% said they would take out a personal loan.
Clearly, small-dollar credit is necessary for many Americans. Policymakers should ensure that consumers continue to have access to safe and affordable credit products, such as installment loans. Borrowing from friends and family or relying on charitable organizations is simply not an option for a significant number of consumers.
Traditional installment loans are an easy and safe way to access a small amount of credit Defined payoff dates, equally amortized payments and clear terms make personal loans the perfect choice for just such a purchase, allowing consumers to leave their long-term budget intact.
January 12th, 2021
