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“Financial Inclusion” has been a long-standing goal in development policy circles, borne at least in part out of the microfinance revolution. Belatedly, wealthier countries like the United States have caught on to the need to pay attention to whether households are included in the formal financial system. But a shared and precise definition of what it means to be included, or excluded, remains difficult to come by.
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The International Business Times featured USFD data as part of a larger piece on new wireless plans for customers with poor credit history. Earlier this week, launched a new service that allows users with bad credit to sign up for a 2-year contract if they've paid their bills on time for 12 consecutive months.
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Earlier this week, The New York Times published a feature on new initiatives aimed at bringing informal savings groups into the formal financial sector:
While informal lending circles among families, acquaintances, co-workers and neighbors are familiar to hundreds of millions of people all over the globe, they are rarely recognized by mainstream financial institutions.
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People run their financial lives with a variety of tools. The first tools that come to mind are likely to be formal, like checking accounts and credit cards. But households often use informal tools that are harder to see from outside, like short-term loans from friends or relatives. Some people use informal financial services because they lack access—or believe they lack access—to quality products or because they do not trust formal options...
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The Taylors overdraft their checking account every two weeks, on purpose.
As described in a recent issue brief published by the U.S. Financial Diaries, the Taylor family’s income level varies significantly from month to month. Sometimes it’s not enough to cover all of their expenses. So, they opened an account at a bank with a simple overdraft fee structure: One $35 charge per overdraft, no daily fees, and an allowance of up to $500 at a time. Since the Taylors typically make only one large cash withdrawal per paycheck – the entire amount of pay – this bank would charge them at most one $35 overdraft fee each cycle, if they happen to need more cash than the amount of that week’s direct deposit...
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Buried at the bottom of Shaila Dewan's recent New York Times article on "Microcredit for Americans" is an idea that deserves much more attention:
"Grameen helps its clients in another way that many experts say is more important than increasing income — it establishes good credit scores. Many poverty alleviation groups have shifted their focus from saving to credit building, because people with poor or no credit must leave large deposits for basic needs like utilities, have trouble renting decent housing, pay much higher interest rates and have a harder time finding jobs...Read More