CFPB Issues Report Detailing Family Finances and Debt in Rural Appalachia
Last week, the Consumer Financial Protection Bureau (CFPB) issued the first in a series of reports about the finances of consumers in rural areas, with this first report focusing on consumers in rural Appalachia. Those consumers tend to earn less than consumers in other rural areas, have higher rates of subprime credit, and experience more medical debt collections.
“The Appalachian region of our country faces distinct challenges from other parts of rural America,” said CFPB Director Rohit Chopra. “Rural America plays a pivotal role in our nation’s food security and national security, so we must work to ensure that the financial marketplace can help families survive and thrive.”
24 percent of rural Appalachians have a medical debt in collections, compared to 17 percent nationally, and their medical debt collections have more than double the delinquency rates for credit products than those without medical debt collections. For example, rural Appalachians with medical debt collections had a 29 percent auto loan delinquency rate, while only 12 percent of rural Appalachians had delinquent auto loans.
The report also found that 21 percent of rural Appalachians got denied mortgage applications, which is double the national denial rate of 11 percent. They also experienced higher home loan interest rates in 2021, averaged at 3.41 percent, compared to the rest of the country which averaged at 3.13 percent.
71 percent of rural Appalachians have an active credit card, compared to 80 percent of Americans nationwide. Typically, many consumers without access to credit cards end up using alternative financial services.
The Appalachian region includes 13 states and is disproportionately rural, with over 2 million Appalachians living in Persistent Poverty Counties (PPCs) with poverty rates of 20 percent or more.