“The have-nots care about getting access to credit, will I get approved for this credit line, what will be my limit, can I get a free credit score, how to get paychecks early and micro investing. People with more financial choice have a different problem. They know they are attractive to financial institutions and see so many options, bells and whistles. They want help in comparing their options.”
It’s become an oft-repeated truism that 50% of the country can’t come up with $400 for an emergency. Chen thinks it is largely true, but the reasons are not obvious.
“They probably earn more than they spend each month but many are in the service economy and that makes their income more volatile. If their car breaks down or a pipe starts leaking, they often have to turn to short-term revolving credit. A credit card with a 30% interest rate is attractive compared to overdrawing your bank account or getting a payday loan.”
He has seen individuals and couples who spend money freely and pay little attention to rising credit card balances until they hit a wake-up call moment and start budgeting.
“It became quite a familiar story,” he said. It made him look for a way to track money in and out more easily.” The Money section of its site offers tips for budgeting, tricking yourself into saving, earning money from side gigs and cutting expenses.
“NerdWallet has a free app that helps you track your cash, discover new ways to save and even build your credit score. To remain unbiased we chose not to include ourselves in the recommendations below, but we think you’ll love us anyway,” the site says.
Indications are that comparison sites still have a lot of work to do.
“Banks are making a lot of money,” said Chen, “about $180 per family per quarter, from services that aren’t much different from the competition.” The lion’s share comes from net interest margin — paying little on deposits and charging more for loans.