A recently published report from a Brookings study found the number of workers in the U.S. who earn a median hourly wage of less than $11.00 and make only $18,000 annually encompasses approximately 53 million individuals. And now during the holiday months, workers are looking not just at meeting current bills, but also funding gifts for friends and family. Budgeting becomes critical at this point. Where do budgeting apps come in?
An article in BankRate takes a look at financial planning tools from banks and credit unions that will deny transactions when consumers reach the limit of their gift giving budget:
Banks and credit unions across the country are letting customers use their apps to set spending limits on their debit and credit cards. If their customers try to exceed the number they set, their transactions will get denied — before spending more than what’s in the account or hitting a credit card’s limit.
Some bank apps also let customers tailor their card preferences more granularly so that customers can, say, make a rule to not let them make transactions online or in certain geographies. While these features are designed to get in front of fraud, they have other uses — budgeting, included.
“Use [the app] not just to monitor fraud or to control fraud but also use it to control spending on yourself,” says Carrie Sumlin, executive director of online and mobile banking at Ally Bank, which offers a card control app that integrates with the main bank app. “We’ve kind of said it’s really to help you save you from yourself.”
Fintech companies, not just banks, are also in the business of helping consumers to keep their spending in check. This is getting to be a bit of a crowded market. Fintechs are offering apps that collect data from primary financial accounts and provide spend tracking, budget setting, and forced savings. Mercator Advisory Group recently published a report on that topic here.
This corner of the financial services industry became a bit controversial this week when it became known that banks, including PNC, are blocking access to third party fintechs to retrieve this kind of critical data in order to protect the information from being used fraudulently and also to suggest that consumers use the financial institutions’ solutions instead. Several articles appeared on that topic, including this one in the Wall Street Journal.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
