Control, Sufficiency, and Social Support Lessons from Low-income Canadians about Financial Wellbeing

This report examines how diary participants achieve the financial wellbeing that they have. The evidence we found is that low-income people work very hard to manage their finances. They endeavor to control their finances so that, as one participant said, their finances don’t control them. They must prioritize needs and wants because there is not enough for both. One participant talked about her goal of having a ‘little bit more’ than her needs so that there was a little extra for savings or small purchases or trips. Finally, we saw that family and friends are terribly important for achieving financial wellbeing because social supports can provide loans, gifts, and emotional support. Having a low-income means that banks offer few financial supports. Of course, family and friends also make demands.

State of Fair Banking in Canada 2020: Borrower and Lender Perspectives

The DUCA Impact Lab defines fair banking as any financial product or service that lives up to the following set of principles:

  • Pricing is clear, transparent, and well understood
  • Pricing is representative of the cost of funds, cost of administration and risk, rather than what the market will bear
  • It is clear to all parties how any personal data is being used by the lender
  • Personal data is only used for purposes agreed to by both the borrower and lender
  • The terms and conditions, including penalties and the rights of each party are clearly explained and well understood by both lender and borrower
  • Products are only recommended that will bring the borrower closer to their expressed goals
  • The borrower is clear on what the institution will do (and not do), with deposits to earn a return
  • The assessment of risk is objective, transparent and not prejudicial
  • Financial institution recommendations are not biased towards in-house product recommendations
  • Products empower consumers when they need access to financial services, not just when they do not

Their Fair Banking 2020 report presents data on the following areas:

  • Debt load and its impact on Canadians
  • Financial confidence
  • Divide between borrowers and lenders
  • How financial products are priced
  • Poor credit and ability to access to financial product and services
  • Demographic snapshot: People of colour and Indigenous Canadians

 



Trading Equity for Liquidity: Bank Data on the Relationship Between Liquidity and Mortgage Default

For many, homeownership is a vital part of the American dream. Buying a home represents one of the largest lifetime expenditures for most homeowners, and the mortgage has generally become the financing instrument of choice. For many families, their mortgage will be their greatest debt and their mortgage payment will be their largest recurring monthly expense.

In this report, we present a combination of new analysis and previous findings from the JPMorgan Chase Institute body of housing finance research to answer important questions about the role of liquidity, equity, income levels, and payment burden as determinants of mortgage default. Our analysis suggests that liquidity may have been a more important predictor of mortgage default than equity, income level, or payment burden.



Mortgage and Consumer Credit Trends Report

The Canada Mortgage and Housing Corporation (CMHC) publishes a quarterly report on Canadian trends relating to mortgage debt and consumer borrowing. Find out the level of Canadian household indebtedness, and emerging trends in outstanding debt balances in different urban areas and by age group. 



Dealing with debt: Worksheet 4 – Tracking fluctuating expenses

Unexpected expenses can make it harder to pay off debts. Knowing your spending needs can help prevent borrowing more money in the future. Use this worksheet to plan ahead for emergency or fluctuating expenses. If you can make a plan to pay for these this year, you’ll be less likely to borrow more money.

'Tracking fluctuating expenses' is the fourth worksheet in the 'Dealing with debt' toolkit. Find the full resource here



High-Cost Alternative Financial Services: The Customer Experience

In early 2017 Momentum reached out to over 50 community members and participants to better understand local experiences with high-cost alternative financial services. In addition to connecting with individuals through interviews, Momentum hosted community consultations in partnership with Poverty Talks! and Sunrise Community Link Resource Centre. The following document summarizes what we learned from these conversations and the loan contracts that borrowers shared with us. It also identifies several themes that emerged from these discussions.



Summary Brief: High-Cost Alternative Financial Services

Many Albertans turn to high-cost alternative financial services when they need a short-term fix for a financial issue. Though these services are expensive and unsafe, they are often the only option for low-income individuals, particularly those who struggle to obtain credit at mainstream financial institutions. High-cost alternative financial services contribute to a two-tiered banking system, in which the poor often pay more for inferior services.

Without more stringent regulation, and in the absence of safe and affordable short-term credit options, Albertans living on lower-incomes will continue to experience financial exclusion and take on heavy debt loads – both of which are major contributors to long-term poverty.



Building consumer financial health: The role of financial institutions and FinTech

In this video presentation Rob Levy from the Center for Financial Services Innovation (CFSI) examines the role of financial institutions in building consumer financial health. 

This presentation was given at the Prosper Canada Policy Research Symposium on March 9, 2018.

Read the slide deck that accompanies this presentation.

Pour lire les diapositives de la présentation, cliquez ici.

View the full video playlist of all presentations from this symposium.



2017 Financially Underserved Market Size Study


CFSI presents their 2017 Financially Underserved Market Size Study that illustrates the growing opportunity to address the needs of financially underserved consumers and identifies significant trends driving marketplace evolution and growth.



High cost lending in Canada


This webinar, "High cost lending in Canada: Risks, regulations, and alternatives," is about why high cost lending products are concerning, especially for financially vulnerable Canadians. Speakers discuss what is driving the use of these products, what kind of regulations are involved, and what advocacy and financial product solutions could look like. The speakers are:

  • Jerry Buckland from Canadian Mennonite University
  • Courtney Hare from Momentum.

Read the presentation slides for this webinar.




Killer Debt – The Impact of Debt on Mortality

Report on the Economic Well-being of US Households in 2015

Tackling financial exclusion: A country that works for everyone?

The Case for Social Investment in Microcredit

Consumer Experiences with Debt Collection – Findings from the CFPB’s Survey of Consumer Views on Debt

Small-Dollar Credit – Protecting Consumers and Fostering Innovation

Minimum Payments and Debt Paydown in Consumer Credit Cards

U.S. Microfinance at the Cross Roads. Scale and Sustainability: Can Lessons from International Experience Help Guide the U.S. Sector?

How are we doing on social policy? Is the recession paralyzing or transformative?

Predatory Lending: A Survey of High Interest Alternative Financial Service Users

Payday Loans: Market Trends

Canadian Consumer Finance Association: Filling the Gap – Canada’s Payday Lenders

Renewing and Renegotiating Your Mortgage

Tips to save money while you’re in school

Shopping Around for a Mortgage

Shopping Around for a Line of Credit

Understanding Credit Card Fees (Financial Literacy Series)

Understanding Variable Interest Rate Mortgages

Buying Your First Home: Three Steps to Successful Mortgage Shopping

How to Order Your Credit Report

An Invisible Finance Sector: How Households Use Financial Tools of Their Own Making

Fringe Financial Institutions, The Unbanked, and the Precariously Banked: Survey Results from Prince George, B.C.

All In: Building the Path to Global Prosperity Through Financial Capability and Inclusion

My Turn to Speak: Voices of Microfinance Clients in Benin, Pakistan, Peru and Georgia

Payday Loan Facts and the CFPB’s Impact

Big Data, Small Credit: The Digital Revolution and Its Impact o Emerging Market Consumers

Access to Capital and Credit in Native Communities

Debt and the Racial Wealth Gap

Why It’s So Hard to Regulate Payday Lenders

Adopting Effective Banking Practices. Ontario Edition

The Real Cost of Payday Lending

Since the early 1990s payday lending businesses have become increasingly prolific in most parts of Canada, including Calgary. Social agencies and advocates working to reduce poverty view payday lenders and other fringe financial businesses as problematic for those looking to exit the cycle of poverty. Payday lenders charge interest rates that, when annualized, top 400%. The industry justifies this by stating that comparisons to an annual rate are unfair as loans are not meant to or allowed to last longer than two months. However, the fact remains that these businesses charge far more for credit than mainstream financial institutions and are more prevalent in lower income neighbourhoods.



Financial Capability in the United States. National Survey – Executive Summary

Financial Capability in the United States 2016

The Workplace as a Platform for Financial Stability: A Profile of Working Bridges

Auto Finance: Market Trends

Fair Financing: Expanding Small-Dollar Short-Term Credit for Albertans

Past Due: Debt-collection reforms that protect consumers not found to restrict credit availability

How Should We Serve the Short-Term Credit Needs of Low-Income Consumers

The Compass Guide to Small-Dollar Credit

A Snapshot of Quality and Innovation Among Small-Dollar Credit Installment Lenders

CFPB Proposal for Payday and Other Small Loans

Building Consumer Credit: A Winning Strategy for Financial Institutions and Consumers

Aligning for Impact: Innovation in Short-term Lending Products

Investing in the American Dream: How Financial Institutions Can Build Long-Term Relationships with Immigrants Before and After Immigration Reform

Know Your Borrower: The Four Need Cases of Small-Dollar Credit Consumers

Fair Lending Report of the Consumer Financial Protection Bureau

Supplemental findings on payday, payday installment, and vehicle title loans, and deposit advance products

Consumer Experiences in Online Payday Loans

Small changes, real impact: Applying behavioral economics in asset-building programs, A brief from the BETA Project

Student Loans are Widening the Wealth Gap: Time to Focus on Equity

Different degrees of debt: Student borrowing in the for-profit, nonprofit, and public sectors

The Potential for Savings Accounts to Protect Young Adult Households from Unsecured Debt in Periods of Macroeconomic Stability and Decline

First Nations Financial Fitness: Your Guide for Getting Healthy, Wealthy, and Wise