Partnership will Explore How to Get People to Save When They Have Debt
San Francisco, April 17, 2018 — LendUp, a fast-growing financial services firm for the emerging middle class, and EARN, a national nonprofit empowering low-income Americans to take charge of their financial lives through savings, today announced a partnership to offer LendUp customers, who represent the nearly half of Americans with subprime credit scores, the opportunity to begin saving with EARN’s SaverLife program.
“Improving the financial health of Americans has been our top priority from day one, and now, through our partnership with EARN, we’re proud to begin playing a role in combating our customers’ savings challenges,” said Sasha Orloff, co-founder and CEO of LendUp. “Today is a pivotal day in our journey, as we build on our foundation as a true destination for the emerging middle class and lay the groundwork for future product innovation into savings. We couldn’t be happier to be working with EARN, a recognized financial health leader working at the intersection of financial technology and economic inclusion.”
Supported by a grant from the Center for Financial Services Innovation (CFSI), the partnership will test various incentives and ways to encourage savings habits and study the correlation between on-time debt payment and savings behavior. The goal is to gain a deeper understanding of a common question: how do we help people start saving when they also have debt?
“As a nonprofit, we are encouraged to see LendUp proactively address saving as a way to bring their customers out of debt,” said Leigh Phillips, CEO of EARN. “Adding opportunities to save is an important step toward addressing the areas in which consumers struggle financially. This partnership allows us to reach hundreds of thousands of individuals and encourage them to begin or renew a savings habit.”
EARN’s SaverLife platform is a free program proven to help families making an average of $27,000 save $465 over six months. SaverLife empowers Americans to take charge of their finances by providing digital financial coaching content, access to resources, and small-dollar cash incentives for regularly setting aside savings. SaverLife seeks to transform the way low-to-moderate income Americans can use financial technology to save money.
LendUp has provided hundreds of thousands of credit cards, more than 4.5 million loans totaling over $1 billion, and more than 1.7 million free online financial education courses. With a mission to provide anyone a path to better financial health, the company has saved customers $185 million in fees and interest, and improved credit scores by hundreds of thousands of points through its loan products alone.
Still, 78 percent of LendUp customers have less than one month of living expenses saved, and 57 percent are not planning ahead for large irregular expenses, leaving them particularly vulnerable to financial shocks. And the overall U.S. population isn’t faring much better: as banks pull back on free savings accounts making it harder for the average American to save, Go Banking Rates recently found that 39 percent of Americans have $0 in savings.
“This partnership shines a light on the powerful impact nonprofit and fintech collaboration can have at scale — something CFSI has advocated for through our work,” said John Thompson, Chief Program Officer for CFSI. “As the nation’s leading authority on consumer financial health, we are happy to help facilitate this important study on savings, an important metric of overall financial health for Americans.”
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Shana Beal, EARN