In a recent editorial on the interest cap that will be imposed on car-title lenders, the Register encouraged credit unions to reach out to “Iowans without good credit.” Indeed, Iowa credit unions are working to offer additional products and services to underserved Iowans that have been stuck applying for cash advances.
Credit unions are known as being consumer-friendly alternatives in the financial industry, with a mission of helping our members achieve financial success.
In 2006, the Iowa credit-union movement assembled a fast payday loan lending task force to identify ways in which the industry could improve service and provide alternatives to individuals who utilize payday and car-title lenders. The task force reviewed credit union “payday alternative” models around the country and ultimately developed a draft of the proposed legislation that has evolved into Senate File 347.
The bill is designed to help Iowa’s not-for-profit credit unions reach out to underserved populations and provide a lower cost alternative to the check-cashing, wire-transfer and payday advance loan products in today’s marketplace.
Specifically, the bill would allow credit unions to offer check-cashing and wire-transfer services to anyone who is eligible for membership at their credit union. By providing a lower-cost alternative than these other outlets, the often “unbanked,” low-income or immigrant populations would be better able to wire money internationally. This provision mirrors legislation recently passed by Congress for federal credit unions.
Several credit unions in Iowa are working to offer alternatives to personal cash loan lending, including Scott Schools Credit Union, University of Iowa Community Credit Union and Veridian Credit Union. These credit unions have discovered ways to offer lower-cost alternative loans to their members that include a built-in savings component to encourage better financial habits and help members get out of the cycle of debt.
To further reach out to underserved populations, the Iowa Credit Union Foundation has a mission to eliminate poverty in the state of Iowa.
The foundation has developed a pilot program that could be replicated nationally to allow low-cost ways for immigrants to send money home, helping them avoid predatory lending. The program also includes individual development accounts, helping consumers save money by having their contributions matched.
The Iowa Credit Union Foundation is hosting a regional conference, “Discovering Untapped Markets,” focused solely on serving potential applicants for no fax payday loans and how to meet their changing needs. All credit unions from Iowa and surrounding states are invited to attend this event May 15 and 16 in Des Moines.
Furthermore, the Iowa Credit Union League has made a commitment to provide credit unions with the resources they need to better serve emerging populations. Recently, the league formed a subsidiary company, Coopera Consulting, whose mission is to inspire people, business and communities to partner for new economic opportunity.
The principals, Warren Morrow and Max Cardenas, are working with individual credit unions to identify new products and services to meet the needs of underserved markets.
Patrick S Jury is chief executive officer and president of the Iowa Credit Union League.