Exam One Flashcards
Meant to address what is believed to be the biggest obstacles and issues for low-income consumers when managing a bank account
National Account Standards
Bank accounts with no overdraft fees, affordable to open an account, free deposits and withdrawals
What are some of the National Account Standards?
A state of being where a person can fully meet current and ongoing financial obligations, feel secure in their financial future, and be able to make choices that allow enjoyment for life
CFPB Financial Well-being
Control over day-to-day and month-to-month finances, Capacity to absorb financial shock, financial freedom to make choices to enjoy life, and being on track to meet financial goals
Four Central Elements to Well-Being
Excessive and abusive fees, loan flipping, promises of no credit checks, little transparency in terms and conditions, offering a product knowing the consumer has little to no chance of repayment
Characteristics of predatory products
Start Fresh!, Credit as an Asset, Start Smart
Bank On Louisville Educational Curriculums
Home/property, car, savings/cash, clothing and valuables, credit, stocks
Physical Assets
Education, skills/hobbies, network, family/friends, community, safety net
Personal Assets
A three part test that checks to ensure that banks are offering and administering products to people of all incomes
Community Reinvestment Act Regulators
Number and amount of loans in a specific area, Other data associated with lending, records of opening and closing branches in specific areas
The three parts of the community reinvestment test
The unfortunate situation where a person who is headed towards economic stability earns a wage increase, but the raise triggers the loss of benefits that are worth more than the raise
Cliff Effect
We underestimate the risks of some things (smoking) and overestimate the risk of others (flying). People have a limited time and capacity to deeply think before acting
Bounded Rationality
The amount of income needed to provide a decent standard of living and it makes sure that all full time workers have enough money to live above the federal poverty level
Living Wage
The lowest wage a business is allowed to pay its employees based on state and federal laws
Minimum wage
The human condition of being unable to obtain or provide a standard level of food, water, and/or shelter for you and your family
Poverty
The goods and services someone cannot obtain
Absolute poverty
Looks at how one social group compares to others
Relative poverty
Refers to families that prefer to manage their finances through cash transactions instead of more traditional financial services
Underbanking
Established “bank on in a box” and created a coalition playbook that can be accessed as well as startup and capacity grants. Created the National Account Standards. Created the National Data Hub.
Bank On 2.0
Not enough money for the minimum balance to open an account, distrust of financial institutions, high or unpredictable fees, identification/credit/or banking history problems, feeling unwelcomed, lack of understanding, overdraft fees, lack of access
Why do payday lenders thrive?
Grading certain areas which leads to the systematic denial of various services to residents of specific neighborhoods and communities (usually racial)
Redlining
His ideas stem from a series of observations he made in grad school that led him to believe that people’s behavior deviated from traditional economic models in predictable ways. Economics professor at Stanford, Cornell, and the University of Chicago.
Richard Thaler
Pushing someone in a good direction by making the process easier
Nudging
If you want people not to do something, make the process more difficult
Sludging
