Credit card how to help the poor through better

Jeffrey Shavers mechanic is a hotel in Chicago, he borrowed $300 in October last year, it is very unusual.He could have used the money to go to see him go to university in New Orleans's daughter, or give her youngest son, age 10 to buy a new bike, but he didn't.Because he can't spend the money, than the cash is placed into a frozen savings accounts, Shavers himself has no right to use."This $300 as the abstract," he said.

Money in the account it is useful, the money is used to help establish credit Shavers.Shavers had begun to repay the loan, than monthly payments of $25.Operating the credit mechanism is the Local Initiatives Support Corporation, is a community development agencies.Every time to pay $25, there is a $25 Shavers frozen savings accounts.Before the end of this year, plus $300, Shavers, there will be a $600 cash in the account.Money is on the one hand, more important is Shavers of repaying the accumulated credit score: close to 689, it is also the average.Have a good credit record, he can apply for to the Visa credit card.

To help low-income people to establish credit and credit card, allowing them to borrow more money, this logic is a little against the normal logic, sounds and some risk.Bad loans savings good mode no longer applies to today's America.More than 70% of americans have a credit card, and few full car to buy a house.Credit is the core of life.

From the life of the credit not only the cost is too high, and potential hazards.Many apartments open wrong no credit.In the United States, no credit record can only pay big money with other people's name to buy electricity, gas fees, or mobile phone Fee.If want to buy a car, you must also have a good credit record, also a $10000 loan, good credit $1300 to pay interest, but the bad record to pay $7600 in interest.Shavers in hourly wage is $16.5 now, you can loan to buy a house.But he knew before credit building, talk about buy a house too early.

Lowitz realized, head of the deposit and loan in common in both are amassing money to achieve purpose.So he started the Shavers in low-income people are encouraged to establish a credit plans, she called the plan a double account - poor people can not only save money also can establish credit.Lowitz said she thought the poor before the cost of living is more expensive, but she didn't know what is the difference in credit after the cost of living is more expensive.

From the Angle of behavioral economics loans are easier to implement than deposits - thinking about $100 a month to save stuff is easy to use, owe people 100 dollars each month can provide more powerful motivation.At New York university economist Jonathan Morduch says: "if you are poor, money is a better method of saving."

To help the poor to establish credit also improved the overall economic health, it's hard to say what specific item to help improve the overall financial plan, small loans, establish credit plan, all of these are in order to make people better.Credit allows people to guard against risk, control their own income.