According to the Pew Research Center, about half of lower-income Americans report household job or wage loss due to COVID-19. Young adults were disproportionately at risk of job losses from COVID-19, as were the least educated and those working low-wage jobs—common demographics of workers in high-risk industries, such as restaurants/bars and other service sectors such as transportation, retail, personal care, arts & entertainment, childcare and many others.
Other common characteristics of these consumers which worsen their financial situation:
- They often don’t receive benefits such as paid leave.
- They do not have the option to work remotely.
- Many do not have emergency funds.
- Many do not have access to liquidity to pay their bills. In fact, under a traditional credit scoring system, many of these workers would not qualify for loans or other types of short-term credit.
- They often have no choice but to turn to high-priced payday loans.
Although federal regulators have repeatedly urged credit unions to offer more favorable alternatives to high-priced loans—particularly on the heels of COVID-19, the prevalence of predatory lending continues, often trapping consumers in endless cycles of payday loan debt.
Give your members a better way, or they WILL stray. In Velocity Solutions’ free white paper, we’ll discuss how the current economic crisis is affecting consumers’ financial behavior, and various strategies and options for providing short-term liquidity to your members in a time when they need your support more than ever.