According to the US Federal Reserve, a mere one percent in the United States has twenty-nine percent of the wealth, and 10% of the richest people in the US make twice the amount of 90%.
The numbers represent a problem within our system. The American Economic Association went on record by saying the tax system had over 400 wealthiest Americans paying the low text rate rather than the other way around.
Because the gap continues to grow, frustrated people take the form of an angry mob. Within the system, leaders such as James Gutierrez think there is a middle ground which would involve companies helping improve incomes of households creating a more sound situation. James Gutierrez has spent his career championing the poor and highlighting a way to end the wealth chasm.
Most people who qualify for financial services such as loans and credit belong to the upper 50 to 90% category according to fintech founder James Gutierrez.
James Gutierrez makes his point by saying that poor people can’t afford to be poor. He explains with an example about auto insurance. He states that auto insurance has two types. One being for non-standard and the other for standard. The non-standard goes for the people who have less than a stellar credit score. These people would pay more for their insurance.
For those people, the only way they could get a loan would be with high-interest rates. Because of these high rates, many individuals end up not being able to pay back and default on loans. Gutierrez’s company Aura and Opportun give help to these people with better financial opportunities. Aura and Oportun use CDFI. CDFI believes in representative communities that have been left out.
Communities that don’t have excellent credit scores often have to buy more expensive items with fewer choices. These communities have to borrow at an astronomical rate of 230 percent. Even when they use cash, they are still dealing with a low credit score with no way out. For these communities to have a higher credit score, they would need to manage their debt and pay off the amount with a regular income.
James Gutierrez understands the practice set in place will only build a bigger gap. A gap that will continue to hold the poor deeper into debt. That is why Gutierrez and his company Aura offer affordable interest loans to individuals who need them the most. Gutierrez is also planning for a collective to help customers when they move into a higher tax category.