Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
How This Fintech Is Helping Low-to-Moderate Income Earners
Fintech Innovation | Aug 6, 2024
Image: Freepik/stockking
How Fintech Empowers Low-to-Moderate Income Earners
A recent Forbes article by Geri Stengel, features how fintech innovations are offering new pathways to financial stability for low-to-moderate wage earners, a demographic often overlooked by traditional financial institutions.
National Problem: Living Paycheck to Paycheck
Research from the Pew Charitable Trust indicates that 60% of households say they incur at least one unexpected shock expense annually. About 40% of people find it extremely difficult to pay for an unexpected $400 bill, which highlights the dire financial situation of many families. These households often find themselves in need of costly financial services, such as high-interest loans, because typical financial products are unable to meet their needs. According to Equifax, approx 50% of Canadians live paycheck to paycheck.
Fintech Solution: Enter Let's Get Set
Let's Get Set is a fintech startup founded in 2020 by Clare Herceg with the goal of addressing the unique financial difficulties encountered by individuals with low to moderate incomes (targeting households with family income less than $100k). Herceg, who possesses an MIT degree and has experience in economic mobility, was motivated to develop financial solutions that address the particular requirements of these households, beginning with creative savings accounts.
Borrow Against Savings Account
Customers of the Let's Get Set savings account can take out loans (up to 2 X) against their savings with flexible repayment terms and a fair interest rate. With a 12% APR and two to twelve month payback terms, this model offers an important safety net for unexpected expenses. Plus, the account provides a 5% annual percentage yield (APY) to encourage more savings. In many cases, it's the lure of additional savings that keeps families saving. Let's Get Set offers a flexible and cost effective option that helps consumers stay out of the financial trouble that comes with taking out traditional high interest rate loans like payday lenders and credit cards who charge well in excess of 20-30%.
Building Trust and Optimizing Tax Refunds and Credits
Many low to moderate income earners simply don't trust financial institutions because they have had bad experiences previously and have challenges meeting minimum balance requirements, and dislike high fees. As a result many households become underbanked or unbanked.
To help build trust, Let's Get Set collaborates with healthcare organizations, using the trust that people have in nurses and healthcare staff. Let's Get Set, in partnership with the National Service Office for Nurse-Family Partnership (NFP) and Child First, has assisted families in preparing taxes and obtaining considerable refunds and credits.
See: Fintech Opportunities in Wealthy Retired Boomer Markets
Is it working? The proof is in the pudding.
Cynthia Garzon, Let's Get Set user:
“When I met Clare, I was a first-time mom, completely new to everything and for lack of a better word, lost. Let’s Get Set helped me gain control financially, understanding what I was supposed to receive and kept me accountable with the savings tool.”
Other Fintech Ideas to Help Lower Income Families
For those with low to moderate incomes, fintech technologies are changing the game by providing easily accessible and reasonably priced financial services. How about developing other products that can assist low-income earners in gaining access to more liquidity and raising their credit ratings, in addition to borrowing at a reasonable rate against savings? Examples include:
1. Micro-Investment Platform
By investing just a few cents regularly, users of micro-investment platforms can help fund diversified portfolios with just a little money. By rounding up purchases to the closest dollar and investing the spare change, these platforms can be integrated with regular spending.
See: Fintech Opportunities in Barter and Trade Marketplaces
An example of this would be an app that rounds debit card purchases to the closest dollar and uses the difference to invest in an index fund or ETF portfolio that is diversified. This strategy promotes investing and saving without requiring sizable initial payments.
2. Community-Based Lending Circles
In community-based lending circles, individuals pool their funds and lend them to one another in a recurring manner. This concept uses community trust and social capital to offer interest-free loans. A fintech platform that makes it easier to establish lending circles, manages payment processing and documentation, and makes sure repayments are recorded with credit agencies to raise members' credit ratings.
3. Flexible Income Smoothing Accounts
Users of flexible income smoothing accounts can withdraw money during times of low income and deposit money during times of high income. These accounts assist in managing volatile cash flows, which are typical for individuals with fluctuating salaries and gig economy workers. Consider an app that connects to a user's bank account, examines their spending trends, and recommends the best amounts to set aside during times of high income.
See: 12 Market Entry Approaches for Fintech Startups
Furthermore, it provides interest-free or low-interest overdraft insurance to offset deficits and guarantee that customers have steady access to money.
Conclusion
Companies like Let's Get Set that offer accessible, low-cost financial solutions to assist individuals manage financial shocks and build a more secure future, are demonstrating the big role that fintechs play in serving underprivileged communities while ensuring these solutions reach and benefit those who need them most.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
 |  |  |
|---|---|---|
 |  |  |
Leave a Reply