A new report from the Center for Financial Service Innovation estimated that financially underserved consumers spent $103 billion on fee and interest charges in 2013, based upon using $1.3 trillion in financial products and services.

Released Thursday, the report estimated the market grew 7.1% from 2012 to 2013, moving from $96 billion to $103 billion.

The CFSI projected market growth at 4.6% for this year into next, moving to $107 billion.

"We anchor this analysis in the products used by those who are traditionally defined as unbanked or underbanked. The FDIC sizes this part of the underserved market at 68 million adults in the US, based on their lack of bank accounts and use of alternative financial services such as check cashing or payday loans," the organization wrote.

The CFSI said the report included a wider range of products used by U.S. individuals who are challenged by subprime credit scores or thin or no credit files, and those who may find their access to a full range of conventional financial products otherwise limited by low-to-moderate household incomes or income volatility.

The CFSI attributed much of the growth to the expansion in subprime auto lending and auto leasing which had been crowding out the more expensive "buy here, pay here" auto sale outlets.

"The increasing availability of subprime credit through credit cards has brought renewed strength to consumer solicitations and approvals in the Subprime Credit Card segment, a trend projected to continue in 2014," the CFSI wrote.

Secured credit cards also saw a sharp jump in revenue driven by a 30% increase in average fees from 2012 to 2013, but is expected to hold steady through 2014 as these fees plateau, according to the CFSI.

Just as with more mainstream financial services, the CFSI reported that products aimed at lower income and financially underserved consumers are moving from to products and services they can access online.

 

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