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The Total Cost Rate

Research firm Opinium and London’s Centre for Business and Economics along with the University of Wisconsin’s Melody Harvey as an author and contributors from the Black Economic Alliance and the Global Black Economic Forum completed the industry leading report. The full report titled the 2023 Cash Poor Report is set to release in a few weeks. Here is an excerpt and findings created by London’s Centre for Business and Economics.

While the full report provides many valuable findings, one of the most important concepts we uncovered was the true cost of borrowing for consumers, which we call the Total Cost Rate (TCR). The TCR includes not just the APR but all known fees that consumers may pay, allowing for a much more comprehensive assessment of the actual cost of capital over 12 months. The findings don’t just introduce the concept but analyze the total cost of the top solutions that consumers use when in demand for short-term capital.

Industry Average Total Costs Rate
Subprime Credit Cards



Payday Providers



BNPL: Buy-Now-Pay-Later



Cash Advance/EWA



SoLo Funds/P2P




Source: CEBR Total Cost Report

This study finds that when comparing fees as a percentage of a $1,000-principal borrowed, subprime credit cards have the highest average with the greatest variability. Payday loans have the second-highest average, with one of the lowest variabilities. While fintech alternative loans have lower averages than the two predominant payday loans and subprime credit cards, its variability suggests these fees can overlap.

We knew that the current Annual Percentage Rate (APR) used industry-wide does not consider all the costs these consumers are responsible for. Borrowers face additional charges such as late fees, origination fees, subscription fees, transaction fees, and other expenses, which are not factored into their APR. This often creates debt traps when providers compound fees for individuals already in a financial crisis.

The total cost rate is a more accurate measurement. We hope this report will encourage policymakers and lenders to adopt a new approach and provide a clearer understanding of the real cost of borrowing. We aim to provide access to capital and a pathway to financial success. As founders who have seen the challenges middle class American face firsthand, we are proud to introduce this new research to shed light on the actual cost of being Cash Poor in America.