King County Community Credit Union Feasibility Study

Transcription

King County Community Credit Union
Feasibility Study
Needs Assessment
Prepared for the Medina Foundation
801 Second Avenue, Suite 1300
Seattle, WA 98104
On the web at: www.medinafoundation.org
Prepared by:
Joan Fanning and Jennifer Bright – Principals, Strategic Market Strategies
February 2005
[email protected]; [email protected]
Http://www.socialmarketstrategies.com
King County Community Credit Union
Feasibility Study
Draft analysis of King County’s low and moderate-income populations,
their financial services needs and available services.
Introduction........................................................................................................................................... 3
Summary of Findings ....................................................................................................................... 5
King County Population Demographics............................................................................................... 7
Overall Population, Race and Ethnicity Information: ...................................................................... 7
Household Income:........................................................................................................................... 8
Characteristics of the unbanked and underbanked and King County’s population.......................... 9
Target Market(s) for financial services aimed at low and moderate-income households. ................... 9
Detailed Demographic Information of Target Areas:..................................................................... 11
Market Analysis of Financial Services in Target Areas ..................................................................... 13
Credit Unions:................................................................................................................................. 13
Banks: ............................................................................................................................................. 14
Payday Loans and Check Cashing Companies:.............................................................................. 15
Other Financial Services................................................................................................................. 16
Service Comparison: Banks, Credit Unions and Payday Loan and Check Cashing Companies ... 17
Short-Term Unsecured Credit Cost Comparison (14-day Example.)............................................. 18
Financial Service Needs of Low and Moderate-Income Individuals ................................................. 18
Data Collection Methods ................................................................................................................ 18
Consumer Survey Response ........................................................................................................... 19
“Banked” Versus “Unbanked” Status............................................................................................. 20
Service Priorities............................................................................................................................. 21
Frequency of Service Use............................................................................................................... 24
Non-English Speakers .................................................................................................................... 24
Interest in a Credit Union ............................................................................................................... 25
Geography....................................................................................................................................... 26
Barriers, Frustrations and Needs: Focus Groups & Provider Surveys .......................................... 27
Financial Education ........................................................................................................................ 30
Service Gaps ....................................................................................................................................... 31
Appendix A – Demographic and Financial Service Profiles of Targeted Areas .................................... 33
Appendix B – List of Credit Unions located in Targeted Areas............................................................. 41
Appendix C: Zip Code Categorization .................................................................................................. 42
Appendix D: Service Provider Detail & Barriers to Financial Services ............................................... 43
Appendix E: Survey instruments ........................................................................................................... 46
King County Community Credit Union –Needs Assessment Report
Page 2
Introduction
Nationwide, research on the “unbanked” is abundant, and suggests that 10 million U.S. households –
the vast majority of them low-income - have no checking or savings account. Many million more
households are “underbanked” meaning that they do not have access to the full range of financial
services – at an affordable cost -- that they need.
Despite regulations requiring traditional commercial financial institutions to better address the needs of
low-income communities, service gaps and barriers still exist. The services offered by traditional
financial institutions may require minimum deposit or account balances that are not possible for lowincome individuals to maintain, can be complicated in their structure with fee and penalties for noncompliance that are difficult to fully understand, and do not provide the transaction-based services
such as check cashing without a waiting period, bill payment, and money transfers needed by this
population. Other barriers to using the services offered by traditional financial institutions include
language barriers, inconvenient hours of operation and location, mistrust of banking institutions, and
regulatory constraints on high-risk lending.
Since the early 1990s, companies such as payday loan and check cashing businesses have become a
significant financial service alternative for many low and moderate-income individuals. Today, such
alternative financial services comprise the fastest-growing segment of the financial services industry.
In many ways, these businesses are designed with the particular needs of low and moderate-income
individuals in mind. They provide conveniently located and quick access to needed money, either
through check cashing services with no hold on the checks or through immediately available shortterm loans.
The problem, however, is that these services are more costly than comparable services provided by
traditional financial institutions – effectively reducing the income level of the low and moderate
populations forced to use these services. For example, the average cost to cash a $300 check at a
check cashing facility in Washington State is approximately $10 or 3.3% of the face value of the
check, whereas most banks and credit unions provide this serve free to their customers. For noncustomers, the average cost to cash a check at a bank or credit union is between 1.5 and 2% of the
check value 1. Likewise, the average cost of a two-week payday loan of $300 is $45 through a Payday
Lender, or an APR of 391.07% whereas the cost to borrow the same amount through a personal line of
credit through a bank or credit union is $1.47 or and APR of 12.81%2.
Moreover, the nature of how these services – especially payday loans – are structured can contribute to
low and moderate-income individuals spiraling into a cycle of debt that is very difficult to climb out of.
National and local data show that most payday loan customers do not use these loans for a single,
occasional short-term emergency source of credit. Instead, an average customer may take out an initial
loan and, when the two-week loan period is up, faces a difficult choice. He/she can use their available
cash to repay the loan, however, given their limited income, they usually find they are short of the cash
needed to repay the loan and meet their other expenses. In this scenario, the customer usually “rollsover” the loan by paying the finance charge and extending the loan for another two-weeks; so a short1
2
Information gathered through phone interviews with a sampling of check cashing facilities, banks and credit unions in King County, WA.
Payday Lending Report – Statistics and Trends for 2003. Created by the Washington State Department of Financial Institutions. http://www.dfi.wa.gov/
Page 3
term loan evolves into persistent, high-cost debt. In Washington State, over 50% of all payday loan
customers either rollover their loan or take out another short-term loan 6 or more times a year.3
Finally, the structure and services of payday lending and check cashing businesses provide no
incentive or financial literacy training to help customers move towards financial stability. Services
such as financial counseling to help customers understand their credit options and move towards more
affordable credit choices or help them establish an overall financial plan that includes savings and
prevents the need for short-term loans tend to be standard for banks and credit unions.
To address these issues and better understand how the financial service needs of low and moderateincome communities in King County can be met, the Medina Foundation has commissioned a
feasibility study. This report summarizes the first part of this feasibility study – a needs assessment
process to understand the demographics of King County’s low and moderate-income population, their
associated financial service needs and the financial services currently available to them.
3
Payday Lending Report, Statistics and Trends for 2003, page 4. Washington State Department of Financial Institutions.
Page 4
Summary of Findings
Throughout December of 2004 and January of 2005, we conducted research on low and moderateincome populations in King County, their financial service needs and the marketplace of available
financial services. Information about King County’s demographics was taken from the 2000 and 2002
Census. Research on credit unions, banks, payday loan and check cashing businesses was done using a
variety of sources including: information from Washington State’s Department of Financial
Institutions, information from the National Credit Union Administration’s web site; information from
online phone books in order to determine number and location of banks, credit unions and payday loan
and check cashing businesses; and telephone interviews with a sampling of each type of financial
institution. Research on the financial service needs of low and moderate-income individuals was done
via surveys and focus groups. In total, over 550 online surveys were distributed and 4 focus groups
with approximately 65 participants were conducted as part of this process.
Following is a summary of the main findings from this research.
Demographic Profile of King County’s Low and Moderate Income Households:
!" In King county, almost half of all households – or 43% -- are either low or moderate income:
o Approximately 33% are all households are low-income (defined as annual household
income under $35,000)
o And 10% of all households are modest income (defined as annual household income
between $35K and $50K.)
!" Unlike larger east-coast and mid-west cities where there tend to be relatively large
concentrations of low-income households in a single area, in King County, low-income
households are distributed throughout the entire county with smaller concentrations in several
areas.
!" The three main areas (identified as our “target areas”) with the highest concentration of low and
moderate-income households are:
o The greater, Seattle downtown area (86% of all households are either low or moderate
income)
o The Delridge, White Center and South Park Area (63.5% of all households are either
low or moderate income)
o The Auburn Area (64.5 % of all households are either low or moderate income.)
Financial Service Needs of King County’s Low and Moderate Income Households:
!" About 10 percent of surveyed respondents were unbanked, having no checking or savings
account. Low-income individuals made up 83 percent of the unbanked. Non-English speakers
were much more likely to be unbanked than English speakers (30 percent versus 8 percent).
!" In terms of desired services, all income groups listed checking accounts, savings accounts and
debit/credit cards in their top priorities. Beyond that, low-income and unbanked respondents
did have different priorities than higher-income/banked, particularly for cash-oriented services
and emergency loans. Expectations of customer service, however, were similar for all groups
(e.g. hours, location).
!" Overall, 78 percent of respondents said they were somewhat or very interested in a new credit
union, with interest decreasing as incomes got higher.
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!" Among low-income focus group attendees, the key characteristics of an “ideal” financial
institution included no-fee/no-minimum checking and savings; respectful customer service;
Saturday and evening hours; debit cards with no fees and no ability to accidentally overdraw;
flexible ID requirements; accessible short-term loans; and financial education. For immigrant
communities, wire transfers and foreign-language service were also important.
!" Barriers faced by the populations of interest were extremely varied and included: language
barriers, mistrust of the banking system, problems with required identification, poor credit
history, dislike or confusion about fees and rates, and asset restrictions for those receiving
public benefits. Additional, specific barriers exist for immigrant communities and victims of
domestic violence.
!" Respondents from all communities wanted services close by, posing challenges for serving the
three areas with high-density low and moderate-income populations (central Seattle,
Burien/White Center, and the Auburn area).
Market Analysis of Available Financial Services
!" Banks or credit unions provide most traditional financial services. In the targeted areas with
high concentrations of low and moderate-income individuals, there are approximately 54 credit
unions and 70 bank service locations.
!" Many credit unions located in the targeted areas have increased their field of membership so
that any Washington State resident can become a credit union member. The average cost to
join a credit union and open an account ranges between $5 to $25 whereas the average
minimum balance required to open a no-fee savings or checking account at a bank is $100.
!" In King County, there is not a single “low-income designated” credit union – designed
specifically to meet the financial service needs of low-income populations.
!" The payday loan and check cashing industries in Washington State are rapidly growing
segments of the overall financial services industry. The size of the payday loan industry alone
in Washington State has gown 84% in the last three years (2000 to 2003.) In the targeted areas
with high concentrations of low and moderate-income individuals, there are approximately 40
payday loans or check cashing businesses.
!" Many homeless individuals in King County and those living in shelters or transitional housing,
depend on the banking services provided by Compass Center. Compass center provides basic
savings account for these individuals, many whom could not otherwise open a savings account
at a bank or credit union due to poor credit histories, insufficient identification or other barriers.
Compass center provides an avenue to basic banking services for approximately 700 lowincome and homeless individuals.
Service Gaps
Given the financial service needs of low and moderate-income individuals and the current marketplace
of available financial services, there exists a need for a suite of financial services that essentially
bridges what is now offered through traditional financial institutions and those offered by the payday
loan and check cashing businesses. Characteristics of the services needed include:
!" Basic savings, checking and debit accounts that are affordable (e.g. a low minimum deposit or
balance) with simplified fee and rate structures. The debit account would be structured so that
individuals could not overdraft their account.
!" Minimum and flexible identification requirements to open these accounts.
!" Affordable cash transaction services such as check cashing and short-term loans.
!" Wire transfers and the ability to purchase money orders at an affordable rate.
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!" Services provided after work hours and during the weekend and, ideally, close to the target
markets.
!" Services provided in a friendly, inviting manner.
!" Financial education and literacy training. This training should be structured so that it is a
significant service offering of the financial institution and done in collaboration with
community-based organizations to reach the widest spectrum of the target market.
King County Population Demographics4
Overall Population, Race and Ethnicity Information:
King County is the largest county in Washington State with more than 1,737,000 people and is the 12th
largest in the nation. The County has more population than ten States including Montana and
Nebraska. King County’s population has grown by 15% since 1990 and is forecasted to grow by an
additional 140,000 persons (8%) to about 1,875,000 in 2012. Seattle makes up nearly one third of the
County’s total population and gained more than one fifth of the County-wide growth during the
decade. However, South King County had the biggest share of the County’s growth with more than
half of the growth occurring there.
The 2002 Census shows that 25 percent of King County residents now are persons of color. NonHispanic whites are the slowest growing racial group, growing by 1.5%. Between 1990 and 2002, the
Hispanic population more than doubled to 95,000 persons and now stands at 6% of the total
population. The Asian population increased almost 70% and represents approximately 12% of the
total population. The African American population grew less rapidly, about 23% and represents 6% of
the overall population. The Native American population remained relatively constant and is
approximately 1% of the overall population (see chart below.)
South King County experienced the most dramatic increase in overall diversity between 1990 and
2000, with minority populations doubling and tripling in several communities. 2000 Census data
shows that Tukwila has the largest percentage of minorities, 46%. Burien, SeaTac and Federal Way
have large Pacific Island communities as well as African American, Latino and Asian populations.
The largest number of King County residents are between 25 to 44 years of age (34%.) Of the
remaining population, a little under one third or 31% are under the age of 25 and a little over one third
or 35% are over 45 (see chart below.)
4
Information was taken from the 2002 King County Annual Growth Report as well as directly from 2000 and 2002 Census data.
Page 7
King County 2002 Population Distribution by Race/Ethnicity
Race/Ethnicity
White (non-Hispanic)
Asian/Pacific Islander
Hispanic
Black (non-Hispanic)
Native American/Inuit/Aleut
Other race (non-Hispanic)
Number of
persons
1,344,052
210,949
103,849
98,843
15,231
3,564
Percentage of
population
75%
12%
6%
6%
1%
Less than 1%
King County 2002 Age Distribution
Age Category
0 to 13
14 to 24
25 to 44
45 to 55
Over 55
Number of
persons
309,034
252,852
606,435
277,256
330,642
Percentage of
population
17%
14%
34%
16%
19%
Household Income:
According to 2000 Census data, the median household income was $53,157, up 47% from the 1990
Census. The median income, however, does not portray the breadth of the income distribution in King
County. A little under a half of the total population, or 43% fall into the category of low or moderate
income households. Of these, 33% are low-income with annual household income of less than
$35,000 and 10% are moderate income with annual earnings between $35,000 and $50,000. An equal
amount of households, 43%, have annual household incomes over $75,000 with the largest single
percentage of households, 23% with annual incomes between $100,000 to $150,000. See chart below
for more information.
King County 2000 Household Income Distribution
Household Income
Less than $9,999
$10,000 to $14,999
$15,000 to $24,999
$25,000 to $34,999
$35,000 to $39,999
$40,000 to $49,999
$50,000 to $74,999
$75,000 to $99,999
$100,000 to $149,999
over $150,000
Number of
Households
43,069
58,065
63,771
76,468
38,526
39,038
98,393
89,690
164,651
56,700
Percentage of all
Households
6%
8%
9%
10%
5%
5%
14%
12%
23%
8%
Page 8
Characteristics of the unbanked and underbanked and King County’s
population.
The definition of the unbanked are individuals who have no relationship with a bank or traditional
financial institution. Nationally, much research has been done on the characteristics of the unbanked
and there is general consensus as to many of the individual characteristics that are associated with not
having a bank account. These studies show that the unbanked are likely to be lower income, less
educated, non-white, younger, and living paycheck-to-paycheck.5 In King County, 33% of the overall
population fall into a low-income category – with incomes under $35,000 -- and are more likely to
unbanked. Approximately 48% of the King County population is between the ages of 14 and 44, an
age category more likely to be unbanked, if combined with a lower-income. And, 25% of the overall
population is non-white – again, a category of individuals more likely to be unbanked if combined with
a low-household income.
The under-banked, defined in this feasibility study are those individuals who turn to alternative
financial services such as payday loans and check cashing businesses for many of their financial
services. In one large national survey, about half of the customers had household incomes of between
$25,000 and $50,000. The remaining customers were almost equally divided between those with
incomes under $25,000 and those with incomes over $50,000- so, in essence, nearly 75% of all
customers had household incomes under $50,000. In addition, they tend to be younger than the
overall population and more likely to have children6. In King County, 20% of the overall population
falls into this category with an annual household income between $25,000 and $50,000. Furthermore,
approximately 48% of the King County population is between the ages of 14 and 44, an age category
most likely to have children and more likely to use the services of the payday loan and check cashing
industry.
It is relevant to our study to note that, contrary to popular belief, the lowest income, unemployed and
unbanked individuals are not necessarily target customers for payday loan and check cashing
businesses. In fact, in order to use these services, one must have an active checking account – so, by
definition, they must be banked. Rather, it is the employed and moderate income individual who tends
to be the target customer of the payday loan and check cashing industry. So, as we consider how best
to meet the financial service needs of both low and moderate income populations, we need to
understand that we are dealing with two different groups - albeit with some overlap - with differing
financial service needs and barriers.
Target Market(s) for financial services aimed at low and moderate-income
households.
To identify possible areas for any new financial services targeted to the needs of low and moderateincome households, we identified communities with the following characteristics:
5
Who is Unbanked, and Why: Results from a Large, New Survey of Low-and-Moderate Income Adults. Paper written by Todd Vermilyea Economic
Analysis Division O.C.C. and James A. Wilcox Haas School of Business University of California, Berkeley. Presented at the Federal Reserve Bank of
Chicago Conference on Bank Structure and Competition May 8-10, 2002
6
The Economics of Payday Lending. John P. Caskey, Swarthmore College. Funded and published by The Filene Research Institute & the Center for
Credit Union Research.
Page 9
1. Has a large concentration of low and moderate-income households with characteristics that
mirror those most likely to be “unbanked” or “under-banked” and use alternative financial
services.
2. Has a relatively high concentration of payday lenders – again, pointing to an “underbanked”
market.
3. Has a proportionately high concentration of low-income households (e.g. with an annual
income under $35,000.) This will help position us to obtain a low-income designation were we
to want to establish a low-income credit union in this area7. (e.g. meaning the credit union
would need to have a majority or 51+% of its members designated as low-income.)
4. Is located in an area where there is easy access to middle and upper-middle income households
who may be a secondary target for a potential credit union. Establishing a primary customer
base of low and moderate-income households with a secondary customer base made up of
middle and upper-middle-income households will help ensure the financial viability of any new
credit union.
5. Is located in an area where there are a number of community based partners with whom we can
partner to reach out to the target populations and assist in providing financial literacy training.
In the King County Area, there are three main areas that meet the majority of these criteria. They are
listed below in order how closely they meet all criteria.
1. Greater Downtown Seattle – which includes South Lake Union, lower Capital Hill, First
Hill area, International District and part of Rainier Valley (See map in Appendix A for a
detailed view of this area.) In the greater downtown Seattle area 86% of all households
are either low or moderate-income with 27% being low-income and 59% being
moderate income. Of the three target areas, the Seattle Downtown area has the highest
concentration of payday loan and check cashing businesses per individual, however, it
also has the highest concentration of traditional financial institutions such as banks and
credit unions, raising a question of whether a new financial institution is needed or
whether a partnership with an existing institution could be formed. This area has the
lowest percentage of middle to upper-income households residing there (14% of
households have annual income over $50,000,) however, it has a large concentration of
businesses and their employees working in this area who could be a secondary target for
any new credit union. Finally, this area is home to a large number of nonprofit,
foundation and other community partners who could help with outreach and financial
literacy training to target customers as well as potentially support the credit union by
joining as members.
2. The Delridge, White Center and South Park Area, located south of Seattle. In this area,
63.5% of all households are either low or moderate income with 4.3% being lowincome and 59% being moderate income. This area has the third highest concentration
7
Designation as a “low-income credit union” must come from the National Credit Union Administration (or sometimes from a state regulatory agency.)
This designation gives a credit union certain special powers, such as the right to accept non-member deposits and secondary capital. Washington State’s
regulations defining low-income credit unions follow those of the NCUA. Section 701.34 of the NCUA Rules and Regulations stipulates that a lowincome credit union is “one where a majority of its members either earn less than 80% of the average for all wage earners as established by the Bureau of
Labor Statistics or whose annual household income falls at or below 80% of the median household income for the nation.”
According to US census data for 2003, the national median income was $43, 318. Eighty percent of the national median income is or $34,654 or
approximately $35,000. So, applying this definition would mean that any low-income credit union needs to have at least 51% of its members have annual
household incomes of $35,000 or less.
Page 10
of payday loan and check cashing businesses with one per approximately ever 7,600
individuals. The area has a high percentage of middle and upper-middle income
households, 36% with household income over $50,000, who could be a secondary
market for any new credit union. Finally, after the Seattle downtown area, the Delridge,
White center and South Park area has the second highest concentration of community
based organizations that could be potential partners, helping with outreach and financial
literacy training.
3. The Auburn Area The Delridge, White Center and South Park Area, located south of
Seattle. In this area, 64.5% of all households are either low or moderate income with
3.5% being low-income and 61% being moderate income. This area has the second
highest concentration of payday loan and check cashing businesses with one per
approximately ever 7,000 individuals. The area has a high percentage of middle and
upper-middle income households, 36% with household income over $50,000, who
could be a secondary market for any new credit union. However, unlike downtown
Seattle and the Delridge/White Center area, there are fewer nonprofit and community
based organizations located in this area – potentially making it more difficult to conduct
outreach to target populations or provide financial literacy training.
Following are tables with detailed demographic information on each of the three target areas:
Detailed Demographic Information of Target Areas:
Downtown Area - Detailed Demographics
Total Population in Target Area:
Low-income Population
% of Population with income under $35K:
Moderate-income population
% of Pop. with income between $35 to $50K:
Average income population
% of Population with income over $50K
Nmber of Chk cashing & payday loan places:
1 Chk Cashing and Payday Loan per every:
68,049
18,394
27.0%
40,015
59%
9,640
14%
13
5,235
Census
Tract
73
85
86
91
90
92
94
87
79
75
74
84
83
82
72
80.01
80.02
81
Area
South Lake Union
Pioneer Sq
Denny Blaine
International Dist
International Dist
Pioneer Sq
Beacon Hill
Denny Blaine
First Hill
First Hill
S. Lake Union
First Hill
First Hill
First Hill
S. Lake Union
Bell Town
Bell Town
Downtown
TOTAL
2000
Pop.
2,218
6,025
4,098
2,083
2,134
1,836
5,202
3,790
4,232
5,554
8,932
3,838
2,508
2,875
3,084
3,401
2,762
3,477
68,049
Income
Category
!"#$%&o()*#+),
$0 to 35
0 to 35
0 to 35
0 to 35
0 to 35
0 to 35
35 to 50
35 to 50
35 to 50
35 to 50
35 to 50
35 to 50
35 to 50
35 to 50
35 to 50
50 to 150
50 to 150
50 to 150
Page 11
Delridge, White Center and South Park Areas - Detailed Demographics
Low-income population
Nmber of Chk cashing & payday loan places:
61,189
2,640
4.3%
36,349
59%
22,200
36%
8
7,649
Census
Tract
265
107
114
268.01
269
268.02
264
112
109
108
113
115
266
267
Area
White Center
Delridge
Highland Park
White Center
White Center
White Center
South Park
South Park
N. South Park
Delridge
Highland Park
High Point
White Center
Seola Beach
TOTAL
2000
Pop.
2,640
6,140
7,904
4,961
1,505
5,117
5,824
3,717
1,181
4,318
5,975
4,173
2,123
5,611
61,189
Income
Category
!"#$%&o()*#+),
$0 to 35
35 to 50
35 to 50
35 to 50
35 to 50
35 to 50
35 to 50
35 to 50
35 to 50
50 to 150
50 to 150
50 to 150
50 to 150
50 to 150
Auburn Area - Detailed Demographics
55386
Low-income population
Number of Chk cashing and payday loan places
1,959
3.5%
33,678
61%
19,749
36%
8
6,923
Census
Tract
305.01
305.03
305.04
308.01
307
268.02
308.02
311
269.02
312.05
312.06
299.02
309.02
Area
Auburn
Auburn
Auburn
Auburn
Auburn
Auburn
Auburn
Auburn
Auburn
Auburn
Auburn
Auburn
Auburn
Total
2000
Pop.
1,959
3,745
4,657
5,958
3,845
5,117
3,699
6,657
3,016
3,893
4,363
3,826
4,651
55,386
Income
Category
!"#$%&o()*#+),
$0 to 35
35 to 50
35 to 50
35 to 50
35 to 50
35 to 50
35 to 50
35 to 50
50 to 150
50 to 150
50 to 150
50 to 150
50 to 150
In summary, it appears that the greater Downtown Seattle area or the Delridge, White Center, South
Park areas are good areas to locate any financial service targeted towards low and moderate-income
households. Were we to want to establish a low-income designated credit union, the greater
Downtown Seattle area would be the primary target location because of the high concentration of lowincome households.
Additional maps in Appendix A provide a picture of the target areas, their demographics as well as the
presence of payday loan and check cashing facilities.
Page 12
Market Analysis of Financial Services in Target Areas
There are two predominant types of institutions providing financial services to low and moderateincome households: “traditional financial services” provided primarily by banks and credit unions and
“alternative financial services” provided primarily by payday loan and check cashing businesses. An
additional resource offered by the nonprofit organization, Compass Center, provides basic savings
accounts to over 700 unbanked homeless and low-income individuals who, due to a variety of reasons,
are excluded from the traditional financial institutions. Following is a brief summary of the scope and
services provided by each category of financial institution.
Credit Unions:
Overview:
Credit Unions are cooperative, non-profit institutions, designed to serve and benefit their members. As
non-profit institutions, Credit Unions reinvest earnings back into the credit union, benefiting members
directly. Usually this translates to higher interest rates on deposits than banks, as well as lower fees on
transactions for their members. In the targeted areas of Greater Downtown Seattle, Delridge/White
Center and the Auburn area, there are approximately 54 Credit Union Service locations provided by
approximately 28 separate Credit Unions. Of these Credit Unions, 14 or 50% are open to any resident
of Washington State -- so out of the total credit union service locations, nearly 70% are can provide
services to any Washington State resident. (See Appendix B for a complete list of credit unions
located in the targeted areas.)
Fees and Services:
In general, the financial barriers to joining a credit union and opening a basic checking or savings
account are quite low. For example, in the credit unions located in the targeted areas, the average fee
to become a member and open an account ranges between $5 and $25 dollars with the majority of the
credit unions charging $10 or under. Services provided by credit unions, tend to mirror those
provided by Banks, however, they usually have slightly lower fees for their services. Typical services
include: savings and checking accounts, debit and credit cards, personal investment opportunities (e.g.
CDs, money markets, IRAs, etc,) personal, auto and home loans as well other services available to
their customers such as check cashing, money orders and wire transfers to account holders. In
addition, most credit unions offer free financial counseling services for their members. A few large
credit unions such as Boeings Employees Credit Union (BECU) and Washington State Employees
Credit Union (WSECU) also offer free financial literacy training for the community and deliver these
trainings in schools, at community centers and in partnership with nonprofit organizations.
In addition to the traditional services offered by credit unions, a small number of credit unions will
soon be offering payday loan and check cashing services. These credit unions will be joining a service
provided by Washington State Employees Credit Union (WSECU) whereby members receive services
traditionally offered by the payday loan and check cashing industry. WSECU’s service, called QCash, provides members with short-term payday loans as well as other cash transaction services such
as the purchasing of money orders and wire transfers. Their fees for these services, however, are about
a third less than industry standard (for example, Q-Cash charges $10 for every $100 borrowed whereas
the industry standard is $15 for every $100 borrowed) and they have structured their service offering
Page 13
so that customers do not fall into a cycle of high-cost debt. First, their repayment time period is 45
days, as opposed to the industry standard of 14 days. Secondly, they limit the number of loans any
customer can take out to no more than two each year. And a customer can only take out another loan
once they have shown that they have repaid the first loan in full, and without borrowed money.
Finally, they offer free, comprehensive financial education and counseling for all customers of Q-cash
and actively work with them to establish sustainable, personal finance practices. Q-Cash was piloted
in five WSECU locations in early 2004 and then extended to all WSECU locations in the later part of
2004. The services are offered through a separate Credit Union Service Organization established by
WSECU. In 2005, other credit unions in Washington State will be able to join the CUSO and provide
similar service to their members.
Branch Locations and Hours of Service:
The majority of the largest credit unions in Washington State are now part of a shared branching
network whereby members can go to any participating credit union’s branch(es) to make deposits,
withdrawals or apply for loans. Essentially, the shared branching network has dramatically expanded
the number of locations where customers can complete their financial transactions – making it much
more likely that there is a branch located within a mile or two of every customer. As part of the shared
branching network, there are locations with ATM only service – open 24 hours a day, 7 days a week
and fully staffed locations. Locations that are staffed tend to be open M-Fridays 8:30 to 5:00 and
limited hours on weekends.
Services targeted to low and moderate-income households:
Unlike many other major metropolitan areas across the country, there does not exist a single lowincome designated Credit Union in either Seattle or King County and there are only 5 low-income
designated credit unions in all of Washington State. Low income designated credit unions are created
specifically to serve low-income communities as have to show that at least 51% of their members are
low-income. A low-income designated credit union is eligible to receive secondary capital (or grants)
from foundations and other investors to help meet the financial service needs of the community and
ensure a credit union’s sustainability.
It is relatively unusual for a heavily populated area like King County or Seattle not to have a credit
union targeted to meet the needs of the low-income community. The absence of such a credit union in
our area, may point to unique challenges presented by our area’s demographics – specifically the lack
of a heavily populated low-income community in a single area. A heavily concentrated population of
low-income households is needed to ensure that a majority of a credit union’s members are lowincome – the requirement needed to receive a low-income designation.
Banks:
Overview:
In the targeted areas of Greater Downtown Seattle, Delridge/White Center and the Auburn area, there
are approximately 70 bank service locations. Banks, unlike credit unions, are not member drive
cooperatives but are private businesses and are open to any individual with the money required to open
an account.
Fees and Services:
In general, the fees and minimum account balance required to open and maintain a checking or savings
account at a bank are higher than those at credit unions. For example, in a sampling of banks
Page 14
contacted with locations in the targeted areas, the average minimum deposit to open and maintain a
savings account is $100. Likewise, this seemed to be the minimum amount to receive a free checking
account. So, the financial barrier to becoming a bank customer is a bit higher than it is to become a
credit union member.
Services provided by banks are similar to those provided by most credit unions. Typical services
include: savings and checking accounts, debit and credit cards, personal lines of credit, personal
investment opportunities (e.g. CDs, money markets, IRAs, etc,) personal, auto and home loans as well
other services available to their customers such as check cashing, money orders and wire transfers to
account holders. Very few banks offered free financial counseling services for the average customer.
However, some offered this service as a free benefit to their premium customers (those with account
balances over a certain threshold.)
In addition to the traditional services offered by most all banks, one bank, Wells Fargo, provides a
payday loan like service. Through this service, called their Direct Deposit Advance Program, a
customer with a direct deposit checking account can get a small cash advance, up to $500 until their
next scheduled direct deposit – usually in two weeks. The fee for this service is $2 for every $20
advanced, so if a customer took the largest cash advance available, the fee would be $50. Similar to
payday loans offered by other companies, Wells Fargo allows individuals to roll-over these advances,
by paying only the service fee, up to 12 times a year. Other than the service offered through Wells
Fargo, currently, no other banks in the targeted areas are offering short-term, payday-like loans.
As mentioned above, there are approximately 70 branch service locations in the targeted areas. In
addition, through the ATM network, most bank customers can use any ATM to make deposits and
withdrawal money from their account 24 hours a day, 7 days a week. For other services such as
personal loans, opening an account, etc, a customer would need to go to a bank during normal business
hours which typically are open M-Fridays 8:30 to 5:00 and limited hours on weekends.
There are no banks in the targeted areas that specifically customize their services to meet the needs of
low and moderate-income households. The Community Reinvestment Act, however, mandates that
most larger banks must provide financial services in low and moderate income communities. This
does not mean, however, that these banks must customize their services to meet the unique needs of
low and moderate households.
Payday Loans and Check Cashing Companies:
Overview:
A payday loan is a small, unsecured, high interest, short-term cash loan provide by a licensed payday
loan company in the state of Washington. In most cases, consumers write a post-dated, personal check
for the advance amount, plus a fee. The lender holds the check for the loan period and then deposits it,
or the customer returns with cash to reclaim the check. In Washington State, the payday loan industry
is a rapidly growing industry. The size of the market has grown 84% in the last three years and the
number of payday loan companies has increased from 90 in 2000 to 124 in 2003.
Similar to payday loan services, check-cashing services have grown dramatically in the past few years.
Check cashing services are provided through check-cashing companies such as Ace Cash Express or
Page 15
Advance America, two large check-cashing companies, through local area Wal-Mart and 7-Eleven’s or
through rent-a-centers and pawn-shops. Because of the diversity of places that offer check cashing
services, it is hard to determine the exact size of this market. However, a stroll down most low and
moderate-income neighborhood streets will attest to the fact that there is an abundance of locations
where, for a fee, an individual can easily cash his or her check.
In the targeted areas, there are approximately 30 payday loan companies and an unknown number of
check cashing companies.
Fees and Services:
Services provided by payday loan and check cashing companies tend to include: unsecured, short-term
loans, check cashing with no holds put on approved checks, selling of money orders and envelopes,
wire transfer of money, both domestic and international and some bill payment services. Some
companies focus exclusively on making payday loans whereas others provide the entire suite of
services.
The Washington State Department of Financial Institutions regulates the payday loan and checkcashing industry. The State of Washington limits the interest that can be charged on payday loans to
no more than $15/per every $100 borrowed for the first $500 and then $10/per every $100 dollars
borrowed after the first $500. The upper limit that can be borrowed is $700. The average fee to cash
a check is 3% of the face value of the check. The cost to wire money depends on the amount and the
location of the money transfer. However, in a sampling of services and associated fees, the charge to
wire money tended to be higher at payday loan and check cashing companies than those charged at
banks and credit unions.
As mentioned above, in the targeted areas there is a minimum of 30 payday loan companies and an
unknown number of check cashing companies. The majority of these companies are open both
evening and weekend hours as well as during the business day. In addition, some are open 24 hours a
day, 7 days a week – making it extremely convenient to individuals in need of quick cash. The
majority of these locations are situated in high-traffic areas that are easily accessible and in close
proximity to other services needed by moderate and low-income households.
The services provided by payday loan and check cashing companies, by their very nature, tend to
target low and moderate income individuals; or individuals who are in need of short-term cash.
However, these services are not targeted at helping these individuals move toward a more secure
financial footing, but rather targeted at meeting their short-term cash needs.
Other Financial Services
Many homeless individuals in King County and those living in shelters or transitional housing, depend
on the banking services provided by the nonprofit organization, Compass Center. Compass Center is a
nonprofit organization providing housing and support services for homeless individuals and families.
As part of their services, they have been providing basic, no-interest bearing, savings account for
homeless individuals and individuals living in low-income, transitional housing and shelters since the
early 70s. More than 700 individuals maintain Compass Center savings accounts. Bank employees
are social workers, not bankers, helping clients set up budgets, build self-discipline, and establish
Page 16
safeguards against unsustainable spending habits. They also provide Representative Payee Services
for the disabled who require a third party to administer their benefits.
Compass Center’s banking services provide an avenue to save for many individuals who could not
otherwise open a savings account at a bank or credit union due to poor credit histories, insufficient
identification or other barriers. Their services act as a bridge, helping homeless and other low-income
individuals establish sustainable financial habits, eventually helping them establish accounts at
traditional financial institutions.
Service Comparison: Banks, Credit Unions and Payday Loan and Check
Cashing Companies
The chart below shows a comparison of the services offered by banks, credit unions, payday loan and
check chasing companies. In addition, it provides a comparison of the ID required to open an account,
the minimum cost to open an account and average fees for services.
Financial
Institution
Bank
Short-term
Minimum Fee t
Money or "payday
Services Offered
ID Required
set up acct. Check Cashing Fees Orders
loans"
Free for acct.
Savings accts; checking acct 2 forms of picture ID;
holders. May pla
debit and credit cards; direct Drivers license and
Varies but hove a hold on some
deposit; personal loans, hom passport, etc or 1 picture around $100 to checks. A few w
loans; CDs and other person and 2 other forms of ID establish no-fee cash checks for 1
investment accts; wire transf such as credit card, Cosc savings and/or to 2% of check
Average of
money orders
card, utility bills, etc.
checking accts. value.
$4.00
*NO
Credit Union
Savings accts; checking acct
debit and credit cards; direct
deposit; personal loans, hom
loans; CDs and other person
investment accts; wire transf
money orders
Payday Loan
Washington State driver
license or other picture I
Short-term loans with limite bank statement showing
credit checking. Cost is $15 active checking acct. W
every $100 loaned. After $5 need to verify employm
cost drops down to $10/per $ and residence with
loaned.
documentation.
N/A
"No-hold" check cashing, m
Check Cashing orders and wire transfers.
2 forms of picture ID;
Drivers license and
passport, etc or 1 picture
and 2 other forms of ID
such as credit card, Cosc
card, utility bills, etc.
1 form of picture ID.
Ranges from $2
to $5 dollars to
become a
member and
establish an acc
N/A
Free for acct.
holders. May pla
a hold on some
Average of
checks.
$2
**NO
N/A
N/A
Yes
Free if
cashing a
check,
Average of 3.3% otherwise a
face value of
average of
50 cents.
NO
check.
Wire Transfers
Hours of
Service
Yes, cost varies
Averages of $1
to $30 domestic
and $20 to $40
international.
M-F 9:00 to
5:00. Some
open on
Saturdays 9:0
to 12:00
Yes, cost varies
Average $12
domestic and $4
international.
Note, with som
CU's internation
transfers can tak
several days.
M-F 9:00 to
5:00. Some
open on
Saturdays 9:0
to 12:00
N/A
Varies but
usually open
day, evening
and weekend
hours. Some
locations ope
24 hrs.
Cost varies but
averages 10% o
cash transferred
on domestic
transfers -- muc
less to Mexico.
Varies but
usually open
day, evening
and weekend
hours. Some
locations ope
24 hrs.
Page 17
Short-Term Unsecured Credit Cost Comparison (14-day Example.)8
Below is a comparison of the cost for a 14-day unsecured loan provided by a payday loan company or
provided by services at a bank or credit union. Included in this comparison is the cost of taking out a
“default” loan by writing a check for which an individual has insufficient funds – or over drafting
one’s account. It is important to include this as a comparison because many low and moderate income
individuals cited the high-overdraft fees as a barrier to using banks and credit unions.
Amount Borrowed
Repayment Period
Interest Rate
Transaction Fee
Interest Paid
Total Cost
APR
Personal Line of Credit Card
Payday Loan Credit Advance Cash Advance
$300
$300
$300
14 days
14 days
14 days
n/a
12.81%
18.80%
$45.00
$0
$13.50
n/a
$1.47
$2.16
$45.00
$1.47
$15.66
391.07%
12.81%
135.75%
Overdraft
Overdraft
Protection One Paid
Protection - Two
Overdraft
Paid Overdrafts
$300
$300
14 days
14 days
n/a
n/a
$28.75
$57.50
n/a
n/a
$28.75
$57.50
249.85%
499.70%
Financial Service Needs of Low and Moderate-Income Individuals
Following is a summary of results of surveys and focus groups held with low and moderate-income
individuals and with human service providers serving these individuals. The goal of these surveys and
focus groups was to identify the financial service needs of low and moderate-income households in
King County.
Data Collection Methods
Data were collected through surveys and focus groups.
!" Surveys of potential customers were distributed both in-person and on-line. The physical
surveys were made available in English and Spanish through 20 different locations9 around
King County, with a focus on downtown/central Seattle, Burien/White Center, and
Auburn/Kent/Renton. The online surveys were sent to an email list of about 500 independent
child care providers and employees/owners of child care businesses. The purpose of this
survey was to get a sense of current financial service usage and barriers; and interest
in/characteristics of a community development credit union. We received valid 331 responses.
!" In addition, we surveyed case managers and other social service professionals who work
directly with low-income individuals and refugees/immigrants in King County. The purpose of
8
Payday Lending Report, Statistics and Trends for 2003, page 5. Washington State Department of Financial Institutions.
Two locations through a social service agency; 11 locations through a community clinic; three low-income apartment buildings; one transitional housing
facility; two grocery stores; and one manufacturing business.
9
Page 18
this survey was to further explore the barriers faced by low-income individuals to using the
mainstream banking system. We received 54 responses.
!" Four focus groups were held with low-income individuals. Three focus groups were held in
English, and one was in Spanish. Three were held in or near downtown Seattle, and one in
Burien. Three focus groups were held in low-income apartment buildings and one in a
transitional housing facility. Three were structured focus groups while one was an opportunity
for informal conversation. In two cases, attendees received $20 cash or gift certificate for
attendance. All together, about 65 people participated in focus groups.
This was not a random or representative sample of King County residents. These results are
illustrative, but not a statistically valid representation of the county population. Because of the manner
in which we collected survey information, there are several ways that our respondents are probably not
representative of the general population of King County.
!" We went out of our way to find low-income individuals, and our income distribution does not
match that of the county as a whole.
!" Because many of the surveys from low-income individuals were filled out by focus group
attendees, it is possible that these individuals self-selected out of interest in the subject matter,
and therefore are more inclined to be interested in a new credit union than the overall lowincome population.
!" Nearly two-thirds of our respondents were child care professionals who responded on-line, and
most upper-income responses came from this group. Any characteristics particular to this
group would skew the overall results accordingly.
Consumer Survey Response
There were 331 valid responses to the customer survey, of which 63 percent came from online
responses and 37 percent came from in-person surveys. Respondents came from 67 different zip codes
in King County. A breakdown of respondent characteristics follows.
Geographic representation
North
Seattle/King
104
East King
194
South King
234
Downtown/
Central Seattle
324
Burien/ White
Center/ SeaTac
164
Page 19
Income
Age
51 to 60
16%
61 to 70
4%
Less
than 20
1%
21 to 40
42%
41 to 50
37%
Over
$50K
32%
Under
$19K
28%
$35K to
$50K
22%
$19K to
35K
18%
Employment status
Student
Retired
Care for home M children
Disabled
Self-employed/home day-care
No job
One or more part-time jobs
Full-time job
0
50
100
150
200
Household size ranged from 1 to 8, with one-quarter of respondents in single-person homes; the
average household size was 3. Respondents spoke 11 different languages, with 90 percent identifying
English as their main language and 6 percent listing Spanish.
“Banked” Versus “Unbanked” Status
Consistent with other research, the lowest income group overwhelmingly represents the truly
unbanked, with no savings or checking account at any financial institution. In our sample, 10 percent
of respondents were unbanked, but thirty percent of low-income respondents were unbanked. Among
unbanked households, 83 percent have incomes below $19,000. See Table 1 for more detail on
account holdings by income group.
Table 1. Within each income group, what percentage of respondents had accounts...
Under $19K
$19K to 35K
$35K to $50K
Over $50K
All respondents
Bank
Credit Union
Any Account
Any Account
55.4%
83.4%
87.3%
83.7%
76.4%
6.0%
38.9%
42.8%
49.9%
33.9%
Any institution (including Compass Center Bank)
Savings
Checking
Savings &
Neither
Only
Only
Checking
20.0%
17.5%
31.3%
31.3%
5.6%
16.7%
74.1%
3.7%
1.6%
22.2%
73.0%
3.2%
1.1%
9.8%
88.0%
1.1%
7.3%
15.9%
66.4%
10.4%
Page 20
Who are the unbanked? (by income)
74
74
34
Under $19K
$19K to 35K
$35K to $50K
Over $50K
834
Service Priorities
Respondents were asked to rate the importance of a variety of financial services, as well as the
attributes of those services (e.g. locations, hours). Summaries of those responses – once again, by
income group, as well as by banked/unbanked status – are included in Table 2 through Table 5. A few
things to note:
!" All income groups put checking accounts, savings accounts and debit/credit cards in their top
five priorities.
!" Not surprisingly, the financial life of the lowest income group revolves around cash – check
cashing, money orders – whereas the highest income group puts noticeably lower emphasis on
cash transactions, almost as if physical cash is an afterthought.
!" About half of low-income respondents, and a third of modest-income respondents, rated payday
loans as somewhat or very important. Interest/use of payday loans did not differ by age.
!" Interestingly, small business loans are of comparable interest to every income group. This may
reflect the large number of child care providers (home-based and small-businesses) in our
sample. However, based on focus group feedback, it may also reflect that low-income
individuals see starting a business as a viable option, particularly for men with skills in the
trades.
!" More differences appear when comparing banked and unbanked individuals. This creates a
certain chicken-and-egg problem with regard to causality. For example, unbanked respondents
gave less importance to “low rates and fees” than banked respondents. There could be many
interpretations of this. Do the unbanked use alternative services because they don’t care about
fees? (This seems highly unlikely given their income level, and would be inconsistent with
qualitative feedback from the focus groups). Have the unbanked simply resigned themselves to
paying higher fees, and therefore rank them as less important because they feel they have no
other choice? Similar questions arise throughout this data, where the more affluent and banked
respondents generally express higher expectations of customer service and convenience.
Page 21
Table 2. Service usage, by unbanked vs. banked status
Unbanked
Not
Important
Important
Banked
Not
Important
Important
How important is each service?
Savings account
29%
71%
9%
91%
Checking account
32%
68%
3%
97%
Check cashing
14%
86%
20%
80%
Money orders/cashiers checks
14%
86%
37%
63%
Money wire transfers
45%
55%
54%
46%
Bill paying (wiring)
40%
60%
31%
69%
Debit/credit card
31%
69%
9%
91%
Food stamps/public benefits
17%
83%
76%
24%
Financial education
29%
71%
44%
56%
Payday loans
57%
43%
79%
21%
Car loans
63%
37%
32%
68%
Small business loans
60%
40%
51%
49%
Student loans
50%
50%
38%
62%
Home loan/mortgage
70%
30%
25%
75%
Home improvement loan
67%
33%
31%
69%
EITC
59%
41%
46%
54%
How important are these attributes of service?
Close to home
10%
90%
3%
97%
Low rates and fees
16%
84%
4%
96%
Open late and weekends
20%
80%
9%
91%
Quick and friendly service
11%
89%
3%
97%
All needs met in one place
17%
83%
5%
95%
“Important” signifies that the respondent indicated the service was “somewhat important” or “very important” to them.
“Not important” signifies that the respondent indicated the services were not important, or that they had no opinion.
Table 3. Most important services, for Unbanked vs. Banked groups:
Unbanked
1
2
3
4
5
6
Check Cashing
Money orders
Savings account
Financial education
Debit/credit card
Banked
Checking account
Savings account
Debit/credit card
Check Cashing
Page 22
Table 4. Service and service attribute importance, by income level
Under $19,000
Not
Important
Important
$19,000 - $35,000
Not
Important
Important
$35,000 - $50,000
Not
Important
Over $50,000
Important
Not
Important
Important
Savings account
19%
81%
9%
91%
5%
95%
9%
91%
Checking account
18%
82%
4%
96%
0%
100%
0%
100%
Check cashing
12%
88%
16%
84%
17%
83%
26%
74%
12%
88%
28%
72%
33%
67%
52%
48%
47%
53%
45%
55%
55%
45%
59%
41%
33%
67%
23%
77%
30%
70%
38%
62%
Debit/credit card
23%
77%
10%
90%
5%
95%
7%
93%
27%
73%
75%
25%
77%
23%
97%
3%
Financial education
33%
67%
35%
65%
41%
59%
50%
40%
Payday loans
53%
47%
67%
33%
88%
12%
90%
10%
Car loans
60%
40%
26%
74%
25%
75%
25%
75%
54%
46%
43%
57%
53%
47%
53%
47%
Student loans
53%
47%
27%
73%
29%
71%
40%
60%
Home loan/mortgage
59%
41%
23%
77%
19%
81%
18%
82%
62%
38%
37%
63%
20%
80%
24%
76%
EITC
58%
42%
34%
66%
45%
55%
50%
50%
How important are these attributes of service?
Close to home
2%
98%
11%
89%
0%
100%
2%
98%
Low rates and fees
7%
93%
9%
91%
3%
97%
1%
99%
13%
87%
10%
90%
7%
93%
11%
89%
5%
95%
6%
96%
3%
97%
1%
99%
6%
94%
8%
92%
3%
97%
8%
92%
“Important” signifies that the respondent indicated the service was “somewhat important” or “very important” to them. “Not important” signifies that the
respondent indicated the services were not important, or that they had no opinion.
Table 5. Most important services, for each income group:
Under $19,000
1
2
3
4
5
6
Check cashing
Checking account
Savings account
Debit/credit card
$19,000 - $35,000
Checking account
Savings account
Debit/credit card
Check cashing
Home loan/mortgage
King County Community Credit Union Assessment Report
Prepared for the Medina Foundation by Jennifer M. Bright, February 2005
$35,000 - $50,000
Checking account
Savings account
Debit/credit card
Check cashing
Home loan/mortgage
Over $50,000
Checking account
Debit/credit card
Savings account
Home loan/mortgage
Car loans
Page 23
Frequency of Service Use
Table 6 shows usage rates of different services by income groups.10 With both banks and credit unions,
frequency of use increases with income. Not surprisingly, check cashing/payday loan businesses, and
pawn shops are used more by lower income respondents. Note the sharp difference in check
cashing/payday loan usage above versus below $35,000 in income. Electronic benefits transfer (which
respondents also probably interpreted to mean direct payroll deposit) shows the least difference across
income groups.
Table 6. How often do you use each business/service?
Weekly
Monthly
Bank (account holders only) – most common responses in bold
Under $19,000
38.60%
59.10%
$19,000 - $35,000
73.80%
21.50%
$35,000 - $50,000
65.40%
29.10%
Over $50,000
74.10%
24.70%
Credit Union (account holders only) – most common responses in bold
Under $19,000
20.00%
80.00%
$19,000 - $35,000
42.20%
47.40%
$35,000 - $50,000
23.00%
42.30%
Over $50,000
43.20%
38.60%
Less than monthly
Never
2.30%
2.40%
5.50%
1.30%
0.00%
2.40%
0.00%
0.00%
0.00%
10.50%
23.10%
15.90%
0.00%
0.00%
11.50%
2.30%
Check cashing or payday loan business
Under $19,000
$19,000 - $35,000
$35,000 - $50,000
Over $50,000
4.50%
6.60%
0.00%
0.00%
24.20%
23.40%
2.60%
5.00%
16.70%
3.30%
7.90%
5.00%
54.50%
66.70%
89.50%
90.00%
3.30%
6.60%
0.00%
0.00%
8.30%
3.30%
0.00%
0.00%
11.70%
0.00%
11.10%
5.10%
76.70%
90.00%
88.90%
94.90%
11.10%
9.10%
10.50%
14.70%
14.30%
27.30%
21.10%
24.60%
4.80%
6.10%
15.80%
4.90%
69.80%
57.60%
52.60%
55.70%
Pawn shop
Under $19,000
$19,000 - $35,000
$35,000 - $50,000
Over $50,000
Electronic benefits transfer
Under $19,000
$19,000 - $35,000
$35,000 - $50,000
Over $50,000
Non-English Speakers
Ten percent of our respondents were non-English speakers or did not have English as their primary
language. Particular findings relevant to non-English speakers:
!" They were much more likely to be poor - 52 percent were under $19,000 income (as opposed to
28 percent in the sample as a whole), and fully 86% were under $35,000.
!" They were also more often unbanked - 30 percent were unbanked, compared to 8 percent for
English-speakers. (See Table 7 for comparison of account holdings for English and nonEnglish).
!" 82 percent said services in their language were somewhat or very important.
10
For banks and credit unions, only bank or credit union account holders are included. For other services, all respondents are included.
Page 24
Table 7. Account holdings by primary language
Savings
Only
6.5%
12.9%
7.2%
English
Non-English
All respondents
Any institution (including Compass Bank)
Checking
Savings &
Neither
Only
Checking
15.3%
70.2%
8.0%
22.6%
35.5%
29.0%
16.0%
66.6%
10.2%
Interest in a Credit Union
Overall, 78 percent of respondents said they were somewhat or very interested in a new credit union,
with interest decreasing as incomes got higher. Again, because many surveys were filled out by lowincome individuals who attended a focus group on the topic, our low-income group may have a
significant number of people who self-selected because of their interest in the credit union.
Interest in a credit union (by income group)
All Respondents
78.34
Over $50K
68.24
$35K to $50K
73.04
$19K to 35K
81.14
Under $19K
0.04
92.34
20.04
40.04
60.04
80.04
100.04
Of those who said they were somewhat or very interested, following were the responses regarding their
interests and likely service usage.
Table 9. Services and attributes desired by those interested in a credit union
Savings account
Checking account
Check cashing
Debit/credit card
Financial education
Payday loans
Car loans
Student loans
Home loan/mortgage
EITC
Not
Important*
Somewhat
Important
Very
Important
10%
5%
18%
29%
50%
38%
9%
67%
37%
71%
24%
44%
33%
28%
32%
43%
27%
14%
21%
37%
27%
32%
13%
10%
30%
16%
36%
16%
29%
16%
27%
19%
63%
81%
61%
34%
23%
40%
78%
23%
33%
13%
30%
30%
38%
46%
41%
38%
Page 25
Not
Important*
Somewhat
Important
Very
Important
23%
11%
22%
13%
17%
76%
86%
71%
84%
80%
How important is this attribute?
Close to home
3%
Low rates and fees
3%
7%
3%
3%
* Rated “not important’ or “no opinion.”
Of those who said they were somewhat or moderately interested in a credit union, following were the
responses to questions about how they might use a credit union. The response regarding initial savings
deposit shows a sort of inverse bell curve, with responses largely at the low end ($5 to $50) and high end
(more than $150). When asked how often they would make a deposit, more than half said once per
month.
How much would you initially deposit?
40
How often would you deposit?
60
50
30
40
20
30
10
20
0
10
4
0
50
75
150
$15
o $2
to $
to $
to $
$5 t
6
$2 5
$5 1
7
than
$
e
r
Mo
0
o
per m
> 1X
nt h
y2
Eve r
s
w eek
ont h
onth
er m
per m
1X p
<1 X
Graphs show percent of respondents who selected each answer.
Finally, respondents were asked how far
they would be willing to travel to use the
credit union. The vast majority of
respondents said they’d be willing to travel
1 to 5 miles, but no more. This is
consistent with response to the question on
having services close to home. It also
presumably poses challenges for trying to
serve all three low-income density area in
King county.
How far would you travel?
11%
20%
Less than 1 mile
1 to 5 miles
More than 5 miles
69%
Geography
As mentioned above, there were responses from the three target areas with the highest densities of lowincome households: downtown/central Seattle and Rainier Valley; the south King County communities
of Renton, Auburn, Kent and Federal Way; and the south Seattle/King County communities of White
Page 26
Center, Burien and SeaTac. There were also responses from east and north King County (from as far
away as Carnation and Monroe).11
Table 10. Respondent characteristics by geography
Downtown/Central Seattle
Burien/White Center/SeaTac
South King
East King
North Seattle/King
Under
$19K
58.3%
23.9%
3.2%
10.4%
10.7%
Unbanked
19.4%
17.6%
1.3%
1.7%
0.0%
Income
$19K $35K $35K
$50K
15.5%
14.6%
32.6%
19.6%
17.5%
33.3%
22.9%
29.2%
3.6%
10.7%
Over
$50K
11.7%
23.9%
46.0%
37.5%
75.0%
Interested
in CU
85.6%
81.2%
75.0%
69.2%
68.9%
The income data for south King County are not consistent with overall population statistics – our sample
had a much higher income distribution than the population at large. This is probably because the North
and South King County responses were disproportionately from online rather than in-person survey
responses (90 to 95 percent online), despite our efforts to reach low-income individuals in these
communities. Most likely, data for Burien/White Center can reasonably be used to paint a picture of the
low-income population in south King, and a large number of social service provider respondents were
also from south King that helps to illuminate the needs and barriers of that community.
Barriers, Frustrations and Needs: Focus Groups & Provider Surveys
The focus groups and in-person conversations with low-income individuals were a valuable source of
qualitative information and deeper understanding of the barriers, frustrations, and needs of this
population. In-person conversations illustrate the true frustrations and limitations of being poor and
unbanked. For example: Those receiving disability benefits from the state now get a debit card (the
Quest card) - which is convenient, except that the debit card is from the state directly, and isn't drawn on
any bank. So every ATM charges the non-customer fee for withdrawing money, and card-holders can’t
withdraw more than $100 at a time, which means they are forced to incur the fee repeatedly. They also
get hit at the other end; someone who lives on a few hundred dollars a month needs every penny, but
most ATMs won't allow withdrawals of less than $20. Getting the last few dollars requires buying
something at a store and asking for cash back. These are the sorts of stories we were able to gather via
in-person conversations.
In addition, we surveyed social service providers to ask them about the particular barriers and needs of
the communities they work with. The 54 respondents worked with individuals from around King
County, with a heavy emphasis on south King County (see the chart below). Their client base included
a wide diversity in terms of income, age, ethnicity, health status, and special needs. A particular effort
was made to connect with agencies serving immigrant communities, since this is one of the target
populations identified as unbanked or underbanked.
11
For a complete categorization of zip codes, see Appendix A.
Page 27
Client base represented by social service provider survey
Where do your clients live? (check all that apply)
North King
East King
West Seattle/White Center
Downtown/ID
South King
04
104
204
304
404
504
604
704
804
The varied themes that emerged from these conversations and surveys are summarized below.
!" -(../#%$0*#1$*22o(#%$&o3+/.)4 Twenty to 50 percent of focus group participants had bank accounts
of some sort. Those who worked with a commercial bank were largely (though not entirely) happy
with their bank; most of them had either done considerable research to find a low-fee option and
learn how to avoid fees, or they had opened an account with the help of a family member to work
around ID or credit history problems.
!" 5&o)/$6"%&o(%$0*#1$*22o(#%)4 All focus groups had a split, with some people satisfied with
reliance on check-cashing (simplicity and convenience) and others dissatisfied (high fees, inability to
earn interest, safety issues regarding reliance on cash). In all groups, participants really knew the
fees and rates for different check cashing, money order, payday loan and wire transfer services. In
each group, questions about these services led to lengthy discussions of who charges what, pros/cons
of different services, and ways to best “work the system” at least cost. Within the options that they
do use; people are clearly well informed. Among the more creative alternatives to a bank account
were the use of a safe deposit box for savings (which only costs $25 per year), and cashing checks at
the post office for a lower fee.
!" 7/)"./$8o.$+/0"%$2*.+)$0(%$8.()%.*%"o#$6"%&$o9/.+.*6)$*#+$8//)4 People like the convenience of
debit cards, but questioned why ATMs allow you to overdraw (and thus incur fees). There was a
general sense that technology should be able to fix this, and not allow you to withdraw money you
don’t have.
!" -./+"%$&")%o.:$"))(/);$*#+$#//+$8o.$2./+"%$2o(#)/3"#<$)/.9"2/)4 Many focus group participants
talked about credit problems that make it difficult or impossible to open a bank account. In some
cases, people owed money to another financial institution, which would in fact exclude them from
opening a new account. Others reported being told they could not open a bank account, but for
reasons which seem questionable (e.g. having a PO box as a mailing address). Still others had been
the victims of identity theft, or had resolved the credit problem but hadn’t been able to clear their
actual credit record. This points to need for credit counseling assistance.
!" =+/#%"8"2*%"o#$>.o03/?)$@$</#/.*3: In every focus group, many people talked about difficulties in
providing adequate identification, whether for opening a bank account or for cashing checks. People
were confused and frustrated at getting different stories about what kind of ID is required, and not
knowing when a requirement really was a requirement, versus simply a way to exclude them because
they were poor, disabled, non-citizens, or had a bad credit record.
Page 28
!" =+/#%"8"2*%"o#$*#+$o%&/.$"))(/)$>*.%"2(3*.$%o$8o./"<#$#*%"o#*3)4
o For foreign nationals, the desired ability to use foreign photo ID was emphasized. Mexican
participants reported that they have both a Mexican citizenship card and a “consular ID;”
they believed that other Latin American immigrants held similar identification. Because of
ID issues, foreign participants were more likely to go to a store and buy something in order to
get a check cashed – they learn which stores will do this, and come to rely on them as their
informal banking system.
o Between ID issues the added need to wire money out of the country, the foreign participants
also seemed more likely to have to go many places to meet all of their financial needs, and
therefore expressed more of a desire to see a “one-stop-shopping” option, ideally in a grocery
store.
o Social service providers listed concerns about immigration status and mistrust of banks by
immigrants from unstable political or economic environments as common major barriers.
o Obviously, language barriers are a problem for anyone with limited English. While the
consumer survey represented a dozen languages, the service providers reported clients
speaking 23 languages.
o Participants pointed out that some banks have formal relationships with Mexican banks and
thus can offer no-fee money wiring.
o Lastly, the Spanish-speaking group felt that if a new option were available that really did
meet the needs of the growing Latino community, marketing would happen by word-ofmouth.
!" A*.%"2(3*.$2&*33/#</)$o8$+o?/)%"2$9"o3/#2/$9"2%"?)4 Social service providers reported that because
Washington is a community property state, victims of domestic violence cannot or will not open
bank accounts for two reasons: (1) abusers have used the community property argument to learn the
whereabouts of their spouse through the bank, and (2) married victims wish to keep their financial
assets independent from their abuser.
!" B))/%$3"?"%*%"o#)$8o.$>/o>3/$./2/"9"#<$>(03"2$0/#/8"%)4 Both focus group participants and social
service providers talked about the asset limitations placed on public benefit holders, which
encourages people to keep savings in cash or gold.
!" C&o.%@%/.?$o.$D>*:+*:E$3o*#)4$ Focus group participants didn’t respond much when asked about
their use of payday loans. This could be because many participants had no checking account (and
were therefore ineligible to use this service); because of stigmas around needing to borrow
emergency funds or the reasons behind debt (a dynamic cited by the social service providers); or
because these particular groups simply did not use this service much. However, when asked what
services would be important in an ideal world, there was general agreement that access to loans is
important. Suggestions included:
o Reasonable emergency loan amount: Loans up to $100, $200, $300, $500 or 20% of an
individual’s monthly income were suggested as a reasonable overdraft or emergency loan
option.
o Reasonable fees and rates: Perceptions of reasonable fees included: 5% to 10% interest; a
flat $10 or $15 per two-week or one-month loan term; a higher up-front fee followed by a flat
$3-5 for subsequent (rollover) months; and interest-free grace periods for the first month on
loans under $500.
o Desire for longer-term loans: Some participants wanted the ability to borrow money for
longer periods of time (e.g. a year or more) and at lower interest rates - “like normal loans”
instead of the two-week, high-fee turnaround loans.
Page 29
!" F%&/.$0*.."/.)4 Issues raised by the social service professionals included many of the ones
described thus far, but there were others as well, and a great deal more detail and insight than is
provided here. See Appendix B for more detail and narrative comments from this survey.
For the three structured focus groups, the following table describes the response to the question: “What
would be the characteristics of your ‘ideal bank,’ whatever that term means to you?”
Table 11. Characteristics of an “ideal bank”
Customer service
Hours
English Group #1
Respectful
Open until 8 pm and some
Saturday hours
Location
Services - general
Loans
Electronic banking
No charge/no minimum
balance checking & savings
Access to short-term loans
Spanish Group
!" Respectful
!" Services in Spanish.
!" Willingness & ability to work
through a language barrier if
Spanish isn't spoken.
Weekends are more important
than evenings.
Convenient location - grocery
store or other "one-stopshopping"
English Group #2
Better convenience for the
physically disabled (reduce
need to stand in lines)
Low fees
No charge/no minimum
balance checking & savings
Access to short-term loans
!" Access to short-term loans
!" Longer-term loans at
reasonable rates
!" Debit card without the
ability to overdraw, and
with convenient no-fee
ATM options
!" Direct deposit
!" No withdrawal limit from
the bank - if you have it,
you can withdraw it
!" Small savings investment
instruments - ability to get
better interest rate without
needing large amounts for
a certificate of deposit
Flexible rules on ID and credit
history
Debit card (with convenient
no-fee ATM options)
Other service
requests
Ability to wire money overseas
with limited/no fees.
ID requirements
Flexible rules on ID and
credit history
Financial education
Money management,
budgeting
Flexible rules on ID and credit
history (specifically, accept
foreign photo IDs)
Saturday hours
Central location
Money management, using
financial services, tax help.
Financial Education
The two English-speaking focus groups expressed a need for in financial education (sometimes for
themselves, often for other people they know), and 83 percent of the social service professionals felt that
there is a need to better educate low-income people about financial services.
Specific suggestions for financial education included:
!" Money basics, particularly but not exclusively for young people: budgeting, bill-paying, basic
banking functions, responsible borrowing, and credit records.
Page 30
!" Education on the financial services industry and how to understand and evaluate different service
options.
!" Financial planning.
!" Homebuyer classes and home/car loans.
!" Classes targeted specifically for immigrant communities – what’s different in the U.S., what to
watch out for, what not to worry about, and classes in foreign languages.
!" Credit counseling help for people with bad credit histories, identity theft problems, or issues
regarding separation of assets/credit from a family member or former spouse.
However, some social service professionals had a different take: That financial institutions and social
service agencies are the ones in need of education.
!" A better understanding of the circumstances facing domestic violence victims and immigrants
would allow social service providers and banking professionals to better help such individuals
navigate their options.
!" Better skills and awareness among bank personnel of foreign languages, cultural issues, and
many of the specific issues raised here – public benefit complexities, identification and credit
challenges – would enable banks to draw in and keep more low-income individuals as customers.
Service Gaps
Given the financial service needs of low and moderate-income individuals and the current marketplace
of available financial services, there exists a need for a suite of financial services that essentially bridges
what is now offered through traditional financial institutions and those offered by the payday loan and
check cashing businesses. Characteristics of the services needed include:
!" Basic savings, checking and debit accounts that are affordable (e.g. a low minimum deposit or
balance) with simplified fee and rate structures. The debit account would be structured so that
individuals could not overdraft their account.
!" Minimum and flexible identification requirements to open these accounts.
!" Affordable cash transaction services such as check cashing and short-term loans. These services
should be structured to help individuals avoid a cycle of debt. For example, payday loan services
should provide for a longer repayment period than the industry standard of 2 weeks (ideally a
repayment period of 30 to 45 days,) there should be a limit on the number of loan “roll-overs”
allowed per year and the interest rate should be lower than the industry standard.
!" Wire transfers and the ability to purchase money orders at an affordable rate.
!" Services provided after work hours and during the weekend and, ideally, close to the target
markets.
!" Services provided in a friendly, inviting manner.
!" Financial education and literacy training. This training should be structured so that it is a
significant service offering of the financial institution and done in collaboration with communitybased organizations to reach the widest spectrum of the target market. Ideally, the financial
education and literacy training would be combined with a savings incentive program such as
Individual Development Accounts (IDAs.) IDAs are essentially a matched savings plan
designed to encourage and help low-income individuals build savings. With IDAs, eligible
individuals commit to saving a specific amount each month and every dollar they save is
matched with three dollars funded primarily through Federal and State program. The limit on the
match is $2,000 over a four year period. Programs that have combined IDAs with mandatory
Page 31
financial education have been very successful in increasing the savings rates of low-income
individuals.
Page 32
Appendix A – Demographic and Financial Service Profiles of Targeted Areas
Page 33
King County Overview - Average Income.pdf
Average (ousehold Income
(2000) by Census Tract
$50,000.00 to $150,000.00
$35,000.00 to $49,999.00
$0.00 to $34,999.00
0 mi
2
4
6
8
Copyright © 1988-2003 Microsoft Corp. and/or its suppliers. All rights reserved. http://www.microsoft.com/mappoint
© Copyright 2002 by Geographic Data Technology, Inc. All rights reserved. © 2002 Navigation Technologies. All rights reserved. This data includes information taken with permission from Canadian authorities © 1991-2002 Government of Canada (Statistics
Canada and/or Geomatics Canada), all rights reserved.
10
12
Downtown Area.pdf
Population (2000) by Census
Tract
6,001 to 9,000
3,001 to 6,000
1,501 to 3,000
0 to 1,500
Average Household Income
$50,000.00 to $150,000.00
$35,000.00 to $49,999.00
$0.00 to $34,999.00
0 mi
0.5
1
1.5
2
2.5
Payday loan and Credit Pnion facilities in Downtown.pdf
Pushpins
Credit Pnions
Chk Cashing and Payday Roan Rocations
Average Household Income (2000) by
Census Tract
$50,000.00 to $150,000.00
$35,000.00 to $49,999.00
$0.00 to $34,999.00
0 mi
0.5
1
1.5
2
Delridge and Ohite Center Area -- Average income and pop. (2000 data)
Population (2000) by Census
Tract
Q,001 to 9,000
3,001 to Q,000
1,501 to 3,000
0 to 1,500
Average Household Income
$50,000.00 to $150,000.00
$35,000.00 to $49,999.00
$0.00 to $34,999.00
0 mi
1
2
3
4
Payday loan and Credit Pnion facilities in Delridge, White Center.pdf
Pushpins
Credit Pnions
Chk Cashing and Payday Loan Locations
Census Tract
$50,000.00 to $150,000.00
$35,000.00 to $49,999.00
$0.00 to $34,999.00
0 mi
0.5
1
1.5
2
2.5
Auburn Area Oopulation and Average Income
!"#$%&'(")*+,---.*/0*12)3$3
45&6'
6,001 to 9,000
3,001 to 6,000
1,501 to 3,000
0 to 1,500
7825&92*:"$32;"%<*=)6">2*
+,---.*/0*12)3$3*45&6'
$50,000.00 to $150,000.00
$35,000.00 to $49,999.00
$0.00 to $34,999.00
0 mi
2
4
6
Oayday loan and Credit Pnion facilities in Auburn Area.pdf
Pushpins
Credit Pnions
Chk Cashing and Oayday Roan Rocations
Census Tract
$50,000.00 to $150,000.00
$35,000.00 to $49,999.00
$0.00 to $34,999.00
0 mi
1
2
3
4
Appendix B – List of Credit Unions located in Targeted Areas
CU-NAME
ALASKA AIRLINES/HORIZON AIR EMPLOYEE
BON-MACY*S
BECU - Branch Office
CASCADE
CREDIT UNION NORTHWEST
CREDIT UNION NORTHWEST Branch
EASTSIDE MUNICIPAL EMPLOYEES
EXPRESS
FINANCIAL SERVICES
GROUP HEALTH
GHCU - Capital Hill Branch
GHCU - Northgate Branch
GHCU - Tukwila Branch
KENWORTH EMPLOYEES
KING COUNTY
KCCU - Tukwila Branch
KCCU - Issaquah Branch
NORDSTROM
NORTHWEST BAPTIST
SEATTLE CREDIT UNION
SCU - West Seattle Branch
PORT OF SEATTLE
SCHOOL EMPLOYEES OF WASH.
SEATTLE METROPOLITAN
SMCU - Branch Office
**SHARE
Share - First Hill Branch
TRANSPORTATION NORTHWEST
VERITY
Verity Downtown Branch
Verity Beacon Hill Branch
Verity - Auburn Branch
Verity - Auburn Branch
WSECU - Branch Office
WSECU - Branch Office
WATERFRONT
WATERMARK
Watermark - Southcenter Branch
PUGET SOUND ENERGY
QUALSTAR
Qualstar -Seattle Branch
Qualstar- Tukwila Branch
Qualstar - Renton Branch
TRANSPORT
WOODSTONE
Woodstone Branch Office
VALLEY MEDICAL CENTER
Address
City
19530 PAC HWY S. SUITE 108
P O BOX 21547
9620 28th Avenue SW
2201 East Madison
1423 NW Market Street
8704 Greenwood Avenue N
4035 23rd Avenue W
5700 4th Avenue South
3120 Third Ave. W
2030 AIRPORT WAY SOUTH
1741 4th Avenue So
1515 DEXTER AVENUE NORTH
115 15th Avenue East
11023 8th Avenue NE
690 Strander Blvd
941 Powell Ave. SW
801 2ND AVE SUITE 100
12834 Interurban Ave. S
1485 11th Ave. NW
P.O. BOX 1130
1604 19TH AVENUE
4025 Delridge Way SW
46 SO NEVADA ST
325 EASTLAKE AVENUE EAST
P. O. BOX 780
3621 33rd Avenue South
801 Third Avenue
10700 Meridian Avenue North
120 Andover Park East
SEATTLE
SEATTLE
SEATTLE
SEATTLE
SEATTLE
SEATTLE
SEATTLE
SEATTLE
SEATTLE
SEATTLE
SEATTLE
SEATTLE
SEATTLE
SEATTLE
SEATTLE
TUKWILA
RENTON
SEATTLE
TUKWILA
Issaquah
SEATTLE
SEATTLE
SEATTLE
SEATTLE
SEATTLE
SEATTLE
SEATTLE
SEATTLE
SEATTLE
SEATTLE
TUKWILA
1600 FAIRVIEW AVE E SUITE 100
715 Minor Avenue
P O BOX 80847
PO BOX 75974
915 2nd Avenue
1660 S. Columbian Way
400 15th SW
1424 Supermall Way
1500 Fariview Avenue East
1100 NE 45th Street
15 S SPOKANE ST.
800 STEWART STREET
200 Andover Park E
P.O. BOX 97034
PO BOX 96730
1731 4th Avenue S
327 Tukwila Pkwy
617 South 3rd Street
930 S 336TH ST., STE D
33615 First Way South
31411 Pacific Highway South
3915 TALBOT ROAD SO., SUITE 211
SEATTLE
SEATTLE
SEATTLE
SEATTLE
SEATTLE
SEATTLE
AUBURN
AUBURN
SEATTLE
SEATTLE
SEATTLE
SEATTLE
SEATTLE
BELLEVUE
BELLEVUE
SEATTLE
TUKWILA
RENTON
FEDERAL WAY
FEDERAL WAY
FEDERAL WAY
RENTON
Note: Credit Unions highlighted in yellow serve all Washington State residents.
Page 41
Min. $ to
open acct
$5
$5
$5
$5
$25
$25
$50
$50
$50
$50
$50
$5
$5
$5
$10
$10
$5
$5
$5
$5
$5
$5
$25
$25
$10
$10
$10
$10
$10
$25
$25
$5
$25
$25
$25
$25
$25
$25
Appendix C: Zip Code Categorization
Seattle
Zip code Area
# responses
98101
Downtown
20
98102
Downtown
1
98103
Greenlake
5
98104
Downtown
27
98105
U District
2
98107
Fremont/Ballard
2
98108
Beacon Hill/South Seattle
6
98109
Lake Union
17
98112
Capital Hill
2
98115
Ravenna/Wedgewood
3
98117
Ballard
3
98118
Rainer Valley
2
98119
Fremont/Magnolia
1
98122
Central Area
7
98144
Central Area
8
Burien, White Center, West Seattle, SeaTac, Des
Moines, Tukwila
98106
West Seattle
5
98116
West Seattle
2
98126
West Seattle
6
98136
West Seattle
2
98146
White Center
4
98166
Burien
11
98168
White Center
4
98178
Tukwila
4
98188
SeaTac/Burien
14
98198
Des Moines
4
South King County: Renton, Auburn, Kent, Federal
Way
98001
Auburn
5
98002
Auburn
5
98003
Federal Way
6
98023
Federal Way
9
98030
Kent
7
98031
Kent
4
98032
Kent
7
98042
Kent/Covington
9
98047
Pacific
2
98055
Renton
5
98056
Renton
2
98058
Renton/Maple Valley
5
98092
Auburn
5
98093
Federal Way
1
Page 42
East King County
Zip code
Area
98004
Bellevue
98005
Bellevue
98006
Bellevue
98007
Bellevue
98008
Bellevue
98022
Enumclaw & East
98027
Issaquah
98033
Kirkland
98034
Kirkland
98038
Maple Valley & East
98039
Medina
98052
Redmond
98059
Newcastle
98073
Redmond
98074
Sammamish
98075
Sammamish
# responses
3
2
6
3
1
2
2
2
10
4
1
13
5
1
2
3
North Seattle/King County
98011
Bothell
98014
Carnation
98019
Duvall
98028
Kenmore
98072
Woodinville
98077
Duvall
98125
North Seattle
98133
North Seattle
98155
Lake Forest
3
2
2
2
3
2
2
6
7
98177
98272
1
1
Shoreline
Monroe
Appendix D: Service Provider Detail
Barriers to Financial Services12
Research has shown that the ability to save even a little money is important in helping people and
families get out of poverty. Other than limited income, what barriers make it difficult for your clients
to open or keep a savings account? Total Respondents: 47. (7 skipped the question.)
Inconvenient location/transportation
challenges
Bank fees
Inconvenient hours of operation
Language barriers
Mistrust of the banking system
Lack of necessary
identification/documentation
Potential loss of public benefits
Cultural or religious concerns about
earning or paying interest
Not a Barrier
26% (12)
Minor Barrier
43% (20)
Major Barrier
23% (11)
Don’t Know
9% (4)
9% (4)
30% (14)
9% (4)
15% (7)
15% (7)
38% (18)
43% (20)
34% (16)
34% (16)
15% (7)
36% (17)
13% (6)
47% (22)
26% (12)
51% (24)
17% (8)
15% (7)
11% (5)
26% (12)
19% (9)
9% (4)
34% (16)
28% (13)
19% (9)
36% (17)
6% (3)
28% (13)
40% (19)
If there are other important barriers to keeping a savings account not mentioned above, please list them
here and tell us whether they are major or minor barriers.
Major Barriers:
Bad credit history or lack of credit history
Lack of prior experience with or knowledge about banking services
Safety of victims fleeing abusers with whom they shared finances (opening
an account makes victims potentially more trackable by abusers.)
Homelessness
Lack of money management skills
Legal issues
Minor Barriers:
Lack of citizenship or undocumented refugee status
Feeling unwelcome as a customer
Not culturally relevant (savings facilitated by informal community
networks or individual families)
Paying down past debt
Preference for using cash
5
4
3
1
1
1
2
1
1
1
1
If your clients have language barriers, what languages do they speak?
South American Languages
Spanish
Tarasco
East European Languages
Bosnian
Hungarian
Russian
Slavic
Ukrainian
12
34
32
1
28
2
1
18
1
5
Southeast Asian Languages
Khmer/Cambodian
Lao
Tagalog
Thai
Vietnamese
African Languages
Amharic
Mandingo
Somali
Tigrinya
Data analysis and compilation of the provider surveys was performed by Marie Sauter.
Page 43
24
4
1
1
1
12
22
4
1
6
2
Asian Languages
Chinese
Japanese
Korean
Samoan
Middle Eastern Languages
Farsi
Arabic
ASL
11
3
3
2
1
5
3
2
2
If you said that mistrust, lack of information and/or cultural concerns are barriers for your clients,
please explain what you mean.
# of Comments
Nature of the Barrier
11 Concerns about being tracked based on information submitted to banking institutions:
Immigration status concerns:
!" Afraid of an employee asking for legal documents instead of just their I.D.
!" Many are undocumented immigrants who are afraid of big institutions that may expose them.
!" Many of them don't trust the bank to keep personal information confidential because of their immigration status
!" The INS and the entire immigration process in the U.S. are extremely intimidating, and many are afraid of giving
their name to any authority for fear of being deported (of course, this fear is worse for illegal immigrants).
Fear of loss of public benefits:
!" Clients on LSI or TANF trust the bank, but don't want DHSH to know how much money they have.
!" Clients on welfare not only fear losing benefits if they open a savings account, it also adds more paperwork to the
process of getting their benefits. This causes mistrust.
!" Low income clients in the welfare system are hesitant to open savings accounts for fear of losing benefits.
!" May believe that they will be penalized by the state for having a savings/checking account
Abuse victims’ concerns:
!" Banks have promised confidentiality, but clients' abusers have been able to locate their whereabouts based on
inquiries at the banks.
!" Required use of social security number and insensitivity or lack of understanding about trackability.
Youth concerns:
!" Some young people see the banking system as part of a larger system that tracks their behavior and activities and
would rather stay under the radar.
8 Lack of knowledge about banking services:
!" Checking accounts are a foreign concept
!" Having savings instead of living hand to mouth is a new way of living that they could use some educating about
!" Immigrant/refugee clients often have very little information about how American institutions (including financial
services) work.
!" Lack of info – no experience with financial institutions
!" Lack of information – many don't know even how to open an account, much less maintain or balance one.
!" Many have never had bank accounts and are not educated as to why or how to have one.
!" Often, an abuser has purposefully isolated a client to keep her from gaining the power that accessing these
resources would provide
!" Sometimes they feel like they need to have a lot of money to be able to open an account.
7
Mistrust of banking institutions
General mistrust:
!" Immigrants coming from unstable political and economic situations in their native countries often have a complete
lack of faith in governmental and financial institutions.
!" Many homeless people have a mistrust of “the system.”
!" Mistrust – may have been told by their abuser not to trust systems
!" They work hard for their money, so they will always mistrust banks.
Fears about being taken advantage of or stolen from:
!" Accounts with minimum balances and other traps to collect fees (i.e. service fees for calling bank) cause people
keep the number of accounts at a minimum. This means avoiding savings accounts and only using the necessary
checking option.
!" Fears include the bank losing their pay check or a bank employee with access to their account withdrawing money
or stealing their identity
!" The belief that banks will steal from them, or that if they owe money, bill collectors and the government can take
money from their bank accounts.
Page 44
5
4
2
2
2
1
Language barrier:
!" Due to the language barrier, they do not get the information they need and a lot of the times they are embarrassed
to ask
!" If they don't speak English, they will have no understanding of what is going on.
!" Insufficient language ability to write checks
!" Learning to use these institutions comes with an additional barrier for immigrant/refugee clients who may never
have used a system like this before or who may not feel comfortable enough with the language to proceed.
!" The lack of Cambodian speaking banking staff is a barrier.
Cultural issues:
!" Cultural concerns – many different issues, such as mistrust, or religious beliefs that prevent using bank accounts
that earn interest
!" Different cultures have different attitudes about credit versus cash versus checks. They also have different attitudes
about banks.
!" It is just not in their culture.
!" They use cash in their homelands and they just want to keep gold or cash because of exchange rate fluctuations and
currency changes.
Credit problems:
!" Clients with a poor credit history feel their past will influence how they are treated at banking institutions.
!" Had an account previously and it was closed in poor standing
Racism:
!" American Indians and Alaska Natives live on what is called “Indian time”. They don’t live by clock time. That can
lead to problems. Because of discrimination and racism, Indian people are often stereotyped as just another
“drunken Indian”.
!" Clients of color have experienced institutional racism and don’t trust institutions or systems.
Shame or embarrassment about lack of resources:
!" I'm beginning to hear from some clients about payday loans, but the loans are a delicate subject that many would
not confide in me about. Sometimes they are used to cover gambling debts or other debts they may not want me to
know about.
!" Many are on public benefits feel shame in opening an account, especially when there are potential fees they may
not be able to avoid.
Mental illness:
!" Mental illness prohibits them from understanding the need for banking and saving money.
Page 45
Appendix E: Survey instruments
Page 46
Fill out this Survey!
Win a $150 Gift Certificate!
Community Development Credit Union
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more about this new credit union if it opens?
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If you choose to provide your name and contact information, it will not be shared with anyone and
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Service Provider Survey
Proposed Community Development Credit Union
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King County Community Credit Union Feasibility Study

Transcription

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