Brigit can’t stop banks from charging overdraft fees, but it can stop people from paying them.
Income inequality is at all-time highs in the US, and it is increasingly tough to be on the wrong end of that spectrum. About half of Americans are living paycheck-to-paycheck, and are one lost paycheck away from financial hardship. Since we don’t teach budgeting in schools, and saving is dependent on income, millions of Americans can’t come up with even $400 for an emergency.
With increased unpredictability of income, unexpected expenses, and the pressures of the CoVid recession, many Americans without access to fair financial products are finding their bank balances dip below zero. And if that happens to you, your bank hits you with an overdraft fee. It hits you when you’re down. This happens more than a billion times each year. Over $30 billion in overdraft fees were charged to Americans in 2020, averaging $34 each time. The majority of overdrafts are for purchases that are under $25, yet more than half are paid back within 3 days.
If you paid $34 to borrow $25 for 3 days, that loan would have a 17,000% APR. That is astronomically high.
And if you have one overdraft a year, on average you’ll have ten. Each and every time, your bank will hit you with an overdraft fee. It hits you again, and again, and again. Financial hardship is very expensive.
This is why we at Lightspeed are energized around Brigit, a holistic financial health app helping people get their finances on track. Brigit looks at people’s individual cash-flows to build personalized financial products that help them budget better, identify excess expenses, manage the timing of their bills, find new sources of income, and track savings. And if all else fails, Brigit can put money into a bank account to bridge cash-flow mismatches and ward off impending overdrafts — saving people hundreds of dollars a year.
With a customer-aligned business model, Brigit is resonating with users, growing 10x in the last two years. They’re doing well by doing good. Lightspeed is proud to help the company help more people by leading their Series A.