ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

A newsletter from the Community Financial Services Association of America (CFSA),

the national trade association for nonbank lenders offering 

small-dollar, short-term credit.

    August 9, 2016

What Consumers Are Saying About the CFPB Rule

for Small-Dollar Lending

The CFPB's proposed rule is a direct threat to consumers' ability to access regulated short-term loans and to manage periodic financial difficulty.

For the millions of Americans that use payday and other small-dollar loans each year, their need for credit will not disappear once these regulations are in place. At a time when, according to a recent Federal Reserve study, forty-seven percent of Americans cannot pay for an unexpected $400 expense, short-term credit plays a critical role in the lives of many families.

This week we're spotlighting the customer's voice, and what those who use these products are saying about the rule:

When asked how do they use small-dollar loans: "I'm a nurse and I work a regular schedule, have a regular income all the time but there are times that things come up unscheduled like auto repairs that you didn't anticipate or a medical bill." - Malinda

When asked why small-dollar loans are important to them: "It helped me to be able to keep my home, go to school, and put food on the table." - Katrica

When asked what they would tell lawmakers about small-dollar loans: "When you get the money...you go and take care of your needs. It would be devastating for a lot of people if they closed these types of businesses." - Dani

When asked what their experience has been taking out a small-dollar loan: "You feel like a family in there. You feel important, they know you, they know what you are doing, they help you." - John

A recent survey compared the views of payday loan borrowers with those who had never used the product. This survey found that people who have actual experience with payday loans have much better perceptions of the product, appreciate having the option, and fully understand the loan terms.

If the CFPB ultimately eliminates payday and other small-dollar loans, consumers will be forced to turn to costlier or less regulated options or not be able to meet their financial obligations. Some consumers will even turn to illegal, unlicensed and unregulated lenders who will inevitably prosper wherever regulated lending is restricted or banned.

You can read more about what consumers think about the CFPB's proposed rule here.

AMY CANTU

CFSA | Director of Communications

703.842.2092 (o)

[email protected] (e)

www.cfsaa.com

AFSPA

AFSPA

A public comment period has begun and will continue through September 14th.

Our goal is to generate as many different comment letters from our member companies, including you, your employees, business associates, contacts and customers. 

We need to count on you to get involved to protect

Financial Stress Affecting Workplace Productivity

Employees could use education about cash management, a survey shows.

Financial Finesse, in its annual Financial Stress Research study, found that many workers are experiencing such stress and that it is having debilitating effects on their lives, including their work. The primary factor that determines a person's financial stress level is cash management, and Financial Finesse found this skill varies widely among individuals.

Among people who have manageable financial stress, 80% have a handle on cash flow, 59% have an emergency fund, and 95% pay their bills on time. For those who have unmanageable financial stress, only 36% have a handle on cash flow, 16% have an emergency fund, and 67% pay their bills on time. Financial Finesse's study found that 25% of workers experience high or overwhelming financial stress-but 85% of workers feel at least some level of financial stress.

Unmanageable stress levels, according to Financial Finesse, indicate that people feel helpless and are living paycheck to paycheck, with expenses exceeding their income and large debt balances.

Liz Davidson, CEO and founder of Financial Finesse, says her company has developed the "C.A.L.M." model to help people get a handle on their finances. "C" stands for creating a plan to manage cash flow. "A" is for automating bill payment and saving for emergencies. "L" stands for lowering nonessential spending, and "M" is for making progress one step at a time.

Read more at PLANSPONSOR

Family Checkbook: Financial well-being becoming a trending topic

Do you hear the buzz? The conversation is getting louder. What started a few years ago as a murmur among a few is turning into excited dialogue and debate!

I'm at the National Summit on Collegiate Financial Wellness and it's energizing. Today's conversations centered on financial literacy: what is it and how can it be increased?

We talked about the need to reach out to young adults before they make decisions about student loans that will impact their lives for years. We also debated whether financial literacy is the same as financial well-being, or do we need more than just basic financial knowledge for people to effectively manage their finances these days.

You may wonder why more than 280 people would meet in Columbus, Ohio, to talk about this. We're driven by current student loan debt loads and research that raises concern about the long-term financial effects on net worth.

"Seven in 10 seniors (69 percent) who graduated from public and nonprofit colleges in 2014 had student loan debt, with an average of $28,950 per borrower," reports the Institute for College Access and Success.

The Federal Reserve Board's latest "Report on the Economic Well-Being of U.S. Households" discusses the financial well-being of families in 2015, and it's alarming. Thirty-one percent of non-retired respondents have no retirement savings or pension, including 27 percent of non-retired respondents age 60 or older. Forty-six percent of adults say they either could not cover an emergency expense costing $400, or would cover it by selling something or borrowing money.

Read the story at the NEWS-GAZETTE

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