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Financial incentives like money in the bank
By Inés Merchán / May 1, 2015 /   Loading Disqus...

A Providence-based nonprofit that provides financial services to low-income Rhode Islanders will use our $5,000 grant to offer small incentives to its next 100 Emergency Loan borrowers. If borrowers make at least three consecutive, on-time payments, they will receive a $50 Stop and Shop gift card and be entered into a raffle for a $500 grand prize. According to Capital Good Fund, borrowers who make their first three loan payments on time are much more likely to pay off the entire loan.

Emergency Loans can be used for a variety of purposes, but most of the agency's clients use them to catch up on rent and utilities or to put down a security deposit on a better place to live. Supporting the initiative is a way for us to keep people warm and dry and out of the food pantry.

But the principal benefit is not just ready access to cash. Capital Good Fund’s interest rate is substantially lower than those of so-called payday lenders and, because the agency reports loan payments to credit bureaus, borrowers see an average increase of 75 points in their FICO scores after paying off the loan on time. And every borrower gets access to the financial counseling that is Capital Good Fund’s bread-and-butter service.

Agency CEO Andy Poser is excited to launch this special promotion for Rhode Islanders struggling with their finances. "Our loans help families cover basic needs such as rent or utilities, and this incentive will put more money for food in the pockets of those in need,” he says.

Capital Good Fund helps people with less-than-perfect credit, low incomes, and other barriers to accessing mainstream financial services, such as bank loans and credit cards. Over the years, the organization has made 741 loans totaling $677,000, coached more than 1,000 people about financial literacy and helped clients obtain $1.9 million in income tax refunds and tax credits.

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