Personal loan app Pigeon wants to remove the awkwardness of lending money to loved ones.
“There is often guilt, shame, and fear associated with helping friends and loved ones with money, and that shouldn’t be the case,” founder Brian Bristol said in a news release Thursday (Jan. 5), as the company officially launched.
According to the release, Bristol created Pigeon — initially called “Pigeon Loans” — during the pandemic to help a family member. He wanted to make an all-in-one tool that could handle the process of giving a loan, sending payment reminders and tracking payments.
Since 2020, Pigeon, which is backed by Y Combinator, has raised close to $3 million in funding and helped users lend more than $2 million, the release stated.
In addition to its loan tools, the company’s app offers financial advice on lending money to friends and family, as well as information on tax services, personal loans, retirement investing and building credit, according to the release.
The launch comes as younger consumers are finding it harder to manage credit card debt while also living paycheck to paycheck.
A report by the Urban Institute found that almost 20% of adults between 18 and 24 who have a credit file in the U.S. also have debt in collections.
In addition, the report said, young adults are particularly vulnerable to credit card, auto loan and retail delinquencies compared to their older counterparts. Five percent of millennials and 4.5% of Generation Z consumers have credit card debt more than 60 days delinquent, versus 3.5% of Generation X borrowers and 1.8% of boomers.
There are some indications, per PYMNTS’ research, that the debt load has added up in recent weeks, especially for paycheck-to-paycheck consumers.
During the most recent holiday shopping season, beginning with Black Friday, 45% of paycheck-to-paycheck consumers relied heavily on credit and financing to get Black Friday deals, paying for nearly 60% of their purchases with these methods.
The same research found that millennials relied on financing more than other groups. Forty-five percent of this age bracket used credit, personal loans and buy now, pay later (BNPL) options to finance a little more than half of their purchases.
Meanwhile, PYMNTS research also suggested a need for the type of financial literacy education Pigeon said it offers.
Last year’s Digital Banking Tracker, a collaboration between PYMNTS and NCR, found that 54% of teenagers said they feel financially unprepared for the future.
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