One path to increasing emergency savings is through increasing the availability of savable funds by reducing fees, expenses, and the budgetary footprint of existing debt. This brief provides an overview of what we have learned from past savable funds research and presents results from our most recent collaboration with Hebrew Free Loan Society, investigating the impact of debt payment reduction and repayment extension on savings opportunities.

This pilot provides support for the idea that finding ways to free up additional funds in the monthly budgets of low- to moderate-income households increases their ability to save more regularly. However, it also highlights the difficulty of saving for many who are burdened by existing high-interest debt. For these households, this research suggests that more favorable credit options with lower interest rates and longer repayment periods allow people to replace onerous debt with more manageable debt, increasing financial wellbeing and bringing them closer to being able to save consistently. For lenders, this research sheds light on the ways that more generous refinancing on loans may increase customer interest and financial stability, potentially increasing repayment rates in the long term by allowing borrowers to build a savings buffer that shields them from financial shocks.

This report is made possible thanks to the generous support of MetLife Foundation.