Financial inclusion refers to the availability and accessibility of financial products to everyone, including both individuals and businesses. It’s an effort to make everyday financial services available to more people at a reasonable cost. Here’s why financial inclusion matters.
A Bank Account
A traditional bank account is out of reach for millions of Americans. If you don’t have an account at a bank or credit union, you may end up living paycheck to paycheck and could be forced to pay for expensive check-cashing services. You’ll pay fees to purchase basic financial products like money orders, and you won’t be able to pay bills or transfer funds online. When you don’t have a bank account, you can’t save for future expenses.
People without a bank account may rely on prepaid debit cards. This can be expensive because there may be monthly fees, ATM withdrawal fees, and fees per transaction. Prepaid cards can’t be used to build credit. Without a bank account, a lot of people hide money in drawers and under floorboards, increasing the risk of loss.
Accessibility to Other Banking Products
There are other drawbacks to not having a bank account. A bank provides access to other products that can help individuals take care of their financial health such as secured credit cards. Using a secured credit card allows you to make a deposit and borrow against your own money, which is much less expensive than relying on predatory loans such as payday loans.
Financial Inclusion and Small Businesses
Small business owners that don’t have a bank account or a credit history can have difficulty getting a loan or line of credit. If you’re a business owner, this can limit your earnings potential since it will be hard for you to grow your business.
Financial Inclusion is the Answer
When financial inclusion is implemented, people who aren’t as privileged have an opportunity to start to save for the future. It may be possible to build credit, borrow money and gradually improve their living conditions. With access to financial services, small businesses may be able to provide job opportunities for others.
Access to financial services allows people to begin to build a credit history with a secured credit card or a credit builder loan. How much you borrow and how well you handle borrowed money are reflected on your credit report, which is used to evaluate your creditworthiness whenever you apply for a loan or credit card. It may also be used by insurance companies and cell phone companies to decide whether they’ll do business with you, and it could also be viewed by potential employers.
Protecting Your Credit
Once you’ve started to build a credit history, it’s important to make payments on time and to make sure your accounts are reporting correctly to the credit bureau. Dovly is an automated credit repair engine that can empower you to build a better financial future by correcting any errors on your credit report. Try it risk-free with our free membership tier. Get in touch with Dovly today.