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  • Writer's pictureThe San Juan Daily Star

Puerto Rico lags behind states in financial well-being

A report based on an analysis conducted through research from the Consumer Financial Protection Bureau and information obtained from a National Financial Capability Study by the Finra Foundation said fewer Puerto Rico-based financial institutions are left to serve the entire island.

By The Star Staff

The financial well-being of Puerto Rico lags behind the rest of the mainland United States, according to an analysis conducted through a combination of research from the Consumer Financial Protection Bureau (CFPB) and information obtained from a National Financial Capability Study by the Finra Foundation.

According to a CFPB report published last week, the bureau works to ensure fair and equal access to financial products and services, including making a concerted effort to ensure that Puerto Rico and the rest of the U.S. territories are being analyzed and served just as are other regions of the United States. The CFPB used 2021 survey data from the Finra Foundation to understand the financial needs of Puerto Rico.

Using the CFPB Financial Well-Being Scale, which measures financial security and freedom of choice, the entity found that the average financial well-being score among adults in Puerto Rico in 2021 was 52 out of 100 – two points lower than the rest of the United States.

“While the share of adults with very low or low financial well-being is similar in Puerto Rico (18.2 percent) and the rest of the U.S. (18.0 percent), the share of adults with high or very high financial well-being is significantly lower in Puerto Rico (26.3 percent) compared to the rest of the U.S. (35.6 percent),” the CFPB said in a report July 27.

The report also said fewer Puerto Rico-based institutions today are left to serve the entire island. The island also has fewer financial products and many lenders operating in the states do not operate in Puerto Rico.

In term of financial inclusion, 12% of the Puerto Rico households do not have bank accounts, money market or CD accounts, compared to 4.5% in the mainland U.S.; 40% of the adults in Puerto Rico do not have credit cards, compared to 20% in the United States; and 34% of the adults in Puerto Rico have used pawn shops, rent-to-own, auto title loan, refund anticipation check or pay day loan at least once over the past five years, compared to 32% in the mainland United States.

“Systemic barriers and challenges limit many Puerto Ricans’ access to fair and affordable financial services and products. What’s more, people encounter problems because of limited ability to speak and read English (the language of most financial transactions and disclosures) and they face rapidly rising housing costs,” the CFPB said. “All these challenges impede economic mobility, making it more difficult for Puerto Ricans to buy homes, save for their children’s future, start businesses, and build wealth.”

The study also found that the annual household median income in Puerto Rico was just below $22,000 in 2021, that 1.4 million people in Puerto Rico are reported as living below the federal poverty line, that almost 13 percent of Puerto Rico residents report that they do not have medical insurance and almost one-in-five reports foregoing medical treatment because of cost, that approximately 10 percent of households that occasionally overdraft their bank accounts may have to pay overdraft fees and that 22% of households pay credit card late fees, the CFPB said.

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