How Financial Institutions Can Structure Small-Dollar Credit for Financial Health

Recent regulatory developments have opened opportunities for lenders – particularly banks – to offer small-dollar credit. Data shows that investing in customers’ financial health results in greater long-term loyalty and profitability. In this brief for financial institutions and other lenders, the Financial Health Network offers a series of recommendations for supporting the short and long-term financial wellness of small-dollar credit customers.

Top Takeaways

Now more than ever, supporting the financial health and stability of people who need small-dollar credit is critical – for consumers and for lenders. Recommendations included in the brief include:

Setting everyone up for positive outcomes with affordable payment structures and no balloon payments

Evaluating the circumstances of each prospective borrower to make sure a small-dollar loan is the right fit

Ensuring products serve as a financially healthier alternative to overdraft protection for consumers struggling with liquidity

Developing and offering financial resilience products alongside small-dollar credit to advance financial health in the long-term

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How Financial Institutions Can Structure Small-Dollar Credit for Financial Health

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