Category Archives: New Products

New Products: Personal Loans NOT Based on Credit Scores

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The last few years have seen a number of start-ups lending money based on factors other than credit scores.  Here are a few highlighted in a recent Economist article:

  • Karrot: “Karrot worries less about borrowers’ credit history—the conventional approach—than about their cash flow. Customers must allow Karrot to monitor their current accounts and other financial data, such as credit-card bills. A big decline in income prompts an inquiry about an extended payment plan (to pre-empt a default); an increase prompts an offer of more credit. The initial evaluation takes only four minutes. Growth has been impressive: Karrot expects to lend $1 billion this year. Its default rate is 5%.”
  • Upstart: “Upstart, based in Palo Alto, is another firm learning to look beyond the credit record, in this case to borrowers’ educational history—an indicator of future earnings and thus the capacity to repay debt.’

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Video Resource: What’s A Smart Credit Card?

Good video to incorporate in your lesson regarding payment types.  In this three minute video, an industry expert reviews smart credit cards on CBS News while also providing a vision for the future of digital payments.

Key terms that come up in the video that students should be ready to define: Continue reading

What Mutual Fund Type Is Taking Over 401(k) Plans?

From Bloomberg:

Their name:  Target Date funds.
Their share of 401(k) contributions in 2015:  More than half expected in 2015.
Their appeal: Simplicity (“the only fund that you will need”) and low fees.
Selection process: Choose target-date fund close to your retirement. If you are starting to work now and expect to retire in 40 years, then choose Target Date Fund 2055.
Composition: Mix of Stock/Bond funds (index funds preferred) that adjusts; as investor gets closer to retirement, moves more into bonds.
Fees: Average of 0.78%.  Vanguard as low as 0.17%

One way to deepen students understanding of this product is to compare two of the larger offerings: Vanguard and Fidelity.  Have them compare these funds across the following dimensions: Continue reading

Want to Make Saving Automatic? There’s An App For That…


When someone asks me “What is the best way to save?”, my first piece of advice is that they should automate the process by dividing their paycheck (direct deposit) between a checking and savings account.  The next question inevitably is “What percentage should I save?” to which I respond, “As much as you reasonably can!” which requires an understanding of the ebbs and flows of one’s expenses throughout the month and year (in other words, a budget).

For the many, who treat budgeting with as much enthusiasm as a standard root canal, my advice is hard to implement.  The good news is that a gaggle of companies stand ready to help those budget averse consumers with apps to automate savings in more creative ways that leverage big data and behavioral finance/psychology to increase savings rates.

Ask your students to read this Kiplinger article and research one of the five featured apps:  Digit, SavedPlus, Simple, Acorns and Betterment.  Here are a list of questions you might use to guide them through their research process: Continue reading

Want Budgeting to Stick With Your Students? Find an App!

USA Today reporting on recent Neilsen study that shows 1) More consumers using budgeting apps on their mobile phones 2) Those that do, are successful at controlling their spending:

In a survey of more than 3,600 smartphone owners who use their phones to shop or bank, out this month, 18% said they use their phones to budget and of those, 69% said they strongly or mostly agree that budgeting apps have helped change their spending habits.

Why do people enjoy using budgeting apps? Continue reading