Emergency Money: Why There’s a Flood of Small-Dollar Loans and Secret Accounts

Financial emergencies, more debt than deposits, bank fee scrutiny, layoffs, recession. Motivated by pressure around overdraft fees or charges for non-sufficient funds (NSFs), some banks and fintechs are shifting from too-little-too-late payday solutions to short-term, small-dollar loans that are capturing a broader audience. But consumers across income segments are using a bigger toolbox of products and services to deal with unexpected expenses—including emergency and secret savings. Fifty-five percent of those in Gen Z and 45% of Millennials have legal “secret accounts,” with the No. 1 purpose of coping with emergencies. Javelin Strategy & Research spills the beans on a large, lucrative, untapped market for consumers who are thinking about getting cash in a snap. Get the scoop on clandestine accounts, the seesaw of saving and borrowing for life’s surprises, and how to acquire and engage customers and employees with digital solutions.

Key questions discussed in this report:

• Why is there a flood of interest in money for emergencies?
• What’s available to help consumers in emergencies, and what do they really want?
• How big is the market of secret bank accounts, credit cards, and loans? 
• Who has secret accounts, why are they secret, and what are they used for? 
• Has digital account opening and servicing increased the popularity of emergency and secret accounts?
• How can banks, fintechs, employers and employee benefits providers, and non-financials increase customer engagement and account acquisition by serving this market? 

Companies Mentioned: 

AARP, ADP, Ally Bank, Bank of America, BECU, Blackrock, Capital One, CFPB, Chime, Commonwealth, DailyPay, Digital Federal Credit Union (DCU), Earnin, Even, FDIC, Fidelity, Fifth Third Bank, PayActiv, Paychex, Paycom, PenFed (Pentagon Federal Credit Union), SchoolsFirst Federal Credit Union, SecureSave, Starbucks, State Employee’s Credit Union, Truist Ventures, Voya, Walmart, Wells Fargo, Workday ;