Low-income families are among the most underserved by the financial industry. The families that need financial services and assistance most either don’t know where to find it or cannot get what they really need. Families who are responsible and careful with their money often struggle with unexpected expenses, while families with one or more irresponsible members may suffer from a lack of safety bumpers on their financial management options.
With the following five financial services and others that perhaps these will inspire, your financial institution can help the low-income families in your area get the financial services they need. Many families need financial assistance in the form of good advice and good banking rather than charity or subsidisation. The services only need to be built to provide what these low-income families need in their daily, monthly, and yearly lives.
Microfinancing for Bicycles and Low-Cost Vehicles
Transportation is hugely important for low-income families who often share a single vehicle for an entire household. Purchasing a vehicle is a big deal for these families and it is often difficult for them to acquire a reputable loan to fulfil their needs. Banks also often underestimate the importance of bicycles and electric bikes/scooters which can make a huge difference for an otherwise one-vehicle family.
By providing targeted loans for bicycles, scooters, and low-cost vehicles, financial institutions can help low-income families to achieve transportation and increase their range from home for job selection.
Reasonable Mortgages for Homes Under $100,000
Homeownership is an incredible step up for low-income families and can help raise them above the poverty level in both expenses and lifestyle. Many low-income families are capable of buying a home, but only homes that cost less than $100,000. These homes are plentiful in the right neighbourhoods, but most banks will not offer a mortgage for a home with a value of less than $100K.
By offering mortgages or reasonable loans for homes between $20,000 and $95,000, you can make it possible for low-income families in your area to become proud homeowners and create a better future for their children through home purchases and improvements.
Microfinancing in Place of Payday Loan Services
Unexpected expenses happen all the time. But for a family that lives paycheck to paycheck, there’s no savings or credit line to cover the costs. This often leads low-income families to take out costly and exploitative payday loans. But it doesn’t have to be this way. With legitimate financial service alternatives, low-income families could come to your bank instead of the payday loan locations to get the short-term loans they need to cover medical costs, car repairs, and other necessary but unexpected expenses.
Credit Cards Designed for Financial Safety
For some families, avoiding financial services is something they’ve been taught to stay safe from credit card mistakes. They may have learned from parents that credit cards are risky and lead to dangerous spending or costly fees. The fee structure has changed since that time, but the worry about risky spending is still a legitimate concern.
However, you also know that low-income families can seriously benefit from an emergency line of credit and the ability to generate a slowly increasing credit score with smart credit usage. Creating credit cards designed for safe usage is a great service you can offer. Cards that only buy groceries, cards that have an absolute no-overdraft limit, and cards with limits that can be set by the users are all useful options that can reduce the risks to both your institute and low-income families.
School and Medical Loans Geared toward Childcare
Finally, let’s not forget that most low-income families have children to worry about, and children are a consistent source of necessary expenses. One of the best things you can do for low-income families is to develop financial services geared specifically toward taking care of children. Back-to-School programs and options for handling medical costs from the occasional broken arm can make a huge difference for the families you are trying to reach.
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