SEATTLE, Wash.-After months of work, a new program geared toward low-income citizens of King County appears to be well on its way to becoming a reality.
The Medina Foundation, Community Capital Development, Boeing Employees Credit Union and several other organizations partnered to create a community development credit union for the greater Seattle area with the Foundation contributing nearly $1 million to the cause.
As the pieces started to come together and the partnership began the process of creating a new charter, Express Credit Union presented an opportunity to get the program out to the residents much quicker by offering to reshape itself to fit the low-income model.
"We got an existing credit union with a charter, with a staff and with a product line that we could adjust," said newly appointed CEO Brenda Kurz. "[They] were looking for a way to grow their membership and didn't have the financial means to upgrade."
The new outreach program, which Kurz said would be piloted in February 2009 leading up to a full-scale launch in May, will pay special attention to the Hispanic community and individuals who usually seek out payday lenders and check-cashers. To get these potential members who are not used to traditional financials more comfortable with the idea, ECU is working with community-based private organizations and social service groups.
"We're bringing the credit union to the members by hiring community service representatives. They will have office hours at the social service agencies we've partnered with," Kurz explained. "They are really going to be charged as educators in addition to being a normal member services representative."
As part of the Bank on Seattle initiative, the new program features low barriers to entry for checking and savings accounts, special non-interest earning accounts for those without ITIN or Social Security numbers, as well as those who have religious objections to earning interest. Members need only $5 to join the credit union, which gives them the opportunity to use free check-cashing services as well as payday loans with longer terms, up to 90 days, to "get people prepared to make small incremental payments to pay that debt down," Kurz noted.
Those payday loans will come with a 15% flat fee, but five percentage points of that fee will actually go into a personal savings account for the member upon repayment of the loan. Members will also have other unique ways to save, such as opening a $100 CD with the opportunity to add to that investment at any time. Debit cards and financial education are also planned.
The focus now is getting the vendor contracts in place, which Kurz has been working on since leaving her post as a vice president for US Bank. She noted that many vendors are offering deep discounts from their usual contracts because of Express Credit Union's mission.
Originally Reported In CU Journal: Jan. 18, 2008
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