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The State of Employee Savings in 2018. Hint: It’s Not Great
But there’s always hope! You just need to know where to look for it…
Traverse the tangled web of financial articles on the internet and you’ll find many lamenting the lack of money Americans have saved for retirement or emergencies. Let’s talk figures: according to a GoBankingRates survey published by Money, 1 in 3 Americans has nothing put away for retirement, while 56% have less than $10,000 for their golden years. Simply put, this isn’t enough.
These statistics indicate that the majority of US citizens are living paycheck-to-paycheck and struggling to make ends meet. Kristen Bonner of GoBankingRates elaborates: “Americans might also be feeling as though their employer match ― or lack of ― is not enough to make it worth it to open an account, as well the growing trend of changing jobs every couple years and not wanting to deal with rolling over funds from one account to another.”
The harmful effects of predatory lending practices
There are short-term implications, too. If an unforeseen setback such as a health emergency strikes, those with inadequate savings will struggle to bounce back. Often, they will seek alternative payment methods such as short term loans. These quick and easy faux-solutions come with disadvantages such as interest and rollover, making them incredibly hard to settle. And before a person knows it, they’re in a cycle of debt perpetuated by loans that simply cannot be repaid without huge sacrifices.
Payday loans, otherwise known as cash advance loans, present themselves as the catch-all answer to monetary strife. But as with most things, the easiest option is probably not the one to choose.
The Center for Responsible Lending conducts in-depth research on the extent and impact of predatory lending to provide useful information to consumers, community advocates, and policymakers. They define abusive loans as such:
- Deceptive and misleading marketing that presents an incomplete picture of the risks and benefits of the product
- Misleading documentation and a lack of transparency that make it hard for borrowers to understand the cost and terms of credit
- Incomplete underwriting that ignores a borrower’s ability to repay the loan and afford other essential living expenses
- Misaligned incentives that drive lenders and other parties (mortgage brokers, automobile dealers) to push loan terms that are not in the best interest of the borrower
- Unnecessary costs and hidden fees that inappropriately increase the overall cost of credit
- A loan structure that encourages consumers to take out new loans shortly after repaying an initial loan, trapping the borrower in a cycle of debt
This brings us to the pertinent question: with so many sharks in the water, what is somebody meant to do in times of emergency?
TrueConnect — a loan solution that prioritizes employee wellbeing
TrueConnect is a tried, trusted, and transparent employee loan solution for unexpected financial problems. We are a technology-driven platform that is free to employers and offers small loans of up to $3,000. These loans are easily repayable via convenient, automatic paycheck deductions over a full year. What’s more, there are no hidden rules, and we’re honest and upfront with regards to these payments from the get-go.
We believe you as an employer can empower employees by lending a helping hand when they need it most. Book a consultation today to give your employees the financial well-being they deserve to feel secure.
For more information, please head over to our website.