Small Dollar Credit

Developing High-Quality, Small-Dollar Credit Products

Every year, an increasing number of Americans are turning to alternative credit sources for quick access to cash. An estimated 15 million people annually use small-dollar credit (SDC) products to meet their financial needs. And tens of millions more rely on subprime credit cards, checking account overdrafts and other expensive forms of credit when their access to traditional credit is limited. SDC products, sometimes called microloans, refer to payday, pawn, deposit advance, auto title, and installment loans, typically under $5,000.

Reliable access to small loans is vital to the financial success of millions of U.S. consumers, yet many SDC products carry terms that put borrowers at risk of becoming trapped in cycles of mounting debt. We recognize a critical need to develop high-quality financial services innovations that can help meet this demand for short-term liquidity while reducing the risks posed by many small-dollar credit products.

CFSI has undertaken extensive consumer research to examine the needs, decisions, and experiences of SDC consumers. Additionally, in consultation with a wide variety of industry stakeholders and consumer advocates, we have used our Compass Principles framework to develop a set of guidelines to define what a high-quality small-dollar credit product looks like.

Small Dollar Credit

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