The Consumer Financial Protection Bureau (CFPB) has released a report detailing the financial difficulties that many rural communities face, including a lack of access to physical bank branches, traditional credit options, and unpaid medical bills.
The federal agency has also launched a new Rural Initiative to address these unique deficiencies that many other communities don't face.
- The CFPB has released a report that highlights undue financial burdens that rural communities are forced to bear.
- The report particularly focuses on a lack of access to banks and bank-offered credit, as well as medical debt.
- The agency's Rural Initiative will focus on addressing these issues and improving their visibility.
Rural Communities Face Unique Financial Difficulties
According to the CFPB, some rural communities are "banking deserts," with physical bank branches few and far between. While online banks have carved out a significant share in the retail banking industry, nearly 90% of rural households visited a bank branch in 2019, making a lack of bank branches a serious problem.
Because of the unique characteristics of rural economies, residents worry that a larger bank may reduce them to a number and make it challenging to obtain credit when they need it.
As a result, Americans in rural areas are less likely to have an established credit history and to turn to non-bank lenders to obtain financing, such as pawnshops and payday lenders. Because these creditors typically charge exorbitant interest rates and fees and don't help borrowers build credit, it can put rural Americans in a more difficult financial position than when they started.
To add insult to injury, unpaid medical bills are more common in the Southeastern and Southwestern United States, where there are a significant number of rural communities. This is often because healthcare costs are higher in rural areas than in urban and suburban areas. These unpaid medical bills make it challenging for rural consumers to access credit and obtain affordable housing and employment.
The Agency's Rural Initiative Is Looking to Address These Needs
The CFPB has already begun a concerted effort to shed light on and address the most pressing financial issues that face rural communities. In particular, the agency plans to do the following:
- Analyze data to better understand the unique needs of rural communities and develop more effective ways for rural residents to file complaints.
- Conduct roundtables with rural stakeholders, including workers, farmers, small business owners and the financial institutions that serve them.
- Work with federal partners, including the U.S. Departments of Agriculture, Housing and Urban Development and Treasury, to ensure that rural communities have the resources they need to meet their financial needs.
You can read the CFPB's report on its website.