We may be looking at the democratization of banking and Investing!
I have written about predatory lenders, especially pay day loans that average about 400% interest and set up vulnerable people to enter a negative debt cycle.
Fortunately, a few tech savvy individuals and corporations created alternatives that a worth looking into by the under and unbanked population. A friend of mine, a manager of a Walmart store, told me that Walmart created or works with a subsidiary called EVEN that allows Walmart employees to get a cash advance on their salary if they need cash for anything before their payday. This creates a better employee and less hassle for managers trying to assist employees with their finances. In addition, the app establishes a budget base upon your bills and calculates how much extra money you have to spend after you pay your bills. It is a true money balance. (The normal paper checkbook balance does not consider future obligations.) The EVEN app considers future obligations and subtracts from your balance as a tool to help you from overspending. Another advantage, similar to other online banks, is that you will receive your direct deposit pay roll one to two days sooner. There is a saving assistant that saves for you automatically.
Another great app is Money Lion. The app is an online bank that is interested in your financial health. Besides a no fee mobile banking account, Money Lion can provide a no interest cash advance after you have made two qualifying direct deposits. There is no overdraft fee or minimum balance. Money Lion helps users set up an automatic no fee investing program and offers low APR loans (less than $1,000) to help customers build their credit. The account also provides rewards for your regular daily debit card spending and the Money Lion website claims it has helped 7.5 million “working” Americans. I call that WalletWise!
Chime is another online bank that allows you to get paid up to 2 days early with direct deposit. Called SpotMe, Chime advertises free overdraft up to $200, access to over 38,000 fee-free in network ATM’S and offers a high yield savings account. Reviews of SpotMe say there are a few limitations. The overdraft limit may start at $20.00 and go up to $200 eventually. Customers can use SpotMe only for applicable purchases and not cash at the ATM.
Another digital bank, called M1, caters to customers interested in more sophisticated robo-advisor investing access, with low interest rate loans that allow you to borrow against your investments. This is a great example of the democratization of investing. In the past you had to hire a financial advisor. They would not talk to you unless you had $100,000 to invest. Otherwise, sadly, you were not worth their time. Not now. Let the rob-advisor help you accumulate wealth. There is no minimum in this new world of money! You can earn 1% interest on your checking account balance and earn 1% cash back on qualifying debit card purchases. Customers give positive comments about the pie chart that shows their portfolio.
It warms my heart to see multiple alternative banking solutions. Traditional banks have their place, but traditional banks service their commercial customers and customers worth a lot of money. There is nothing wrong with that. Except their expensive fees if you do not meet their deposit threshold. It is great to see online banking alternatives for the rest of us.
Please comment and share if you have any online banking experiences you would like to share!
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