What is meant by reaching out to low wealth households?
Low wealth households lack the financial resources to help them through income disruptions or financial emergencies. They are asset poor. Given the state of the national economy, many more are joining the ranks of low wealth each day. Reaching out to these households mean offering affordable financial products and opportunities to build wealth. It may mean offering non-traditional products such as payday loan alternatives, credit builder programs, and small savers products. It may mean partnering with community organizations to provide VITA services, IDA programs, micro-business loans, and financial education.
Who are the low wealth households?
Eighty percent of households hold just 16% of total U.S. net worth distribution. So there are a lot of low wealth households to serve. Whereas even high income level households can fall into the definition of low wealth, those households most apt to have low wealth include: * Low- to modest-income households * Minorities * Young adults * Single parent households * Those with disabilities
Why should credit unions care?
Thirty million workers in the U.S. today between the ages of 18 and 64 earn $9 per hour or less. That equates to $18,800 per year and puts a family of four at the poverty level. An added burden to low wage families is the lack of common employee benefits such as health insurance, sick leave and even vacation time. A single catastrophic event such as an illness can leave these families without shelter or adequate food. Helping households of modest means is part of the credit union social mission. The credit union movement began because many consumers had little access to affordable financial markets. Unfortunately, that hasn’t changed. The need for credit union cooperatives serving under-served markets remains as strong today as it did 100 years ago.
What can credit unions do?
Many credit unions have long recognized that serving the ever-growing low-wage and low-wealth markets make good business sense. Affordable, but sustainable products and services help modest income households use more of their earnings to build wealth. The five examples of credit unions included here show a wide range of products, services and community partnerships that exhibit member and community commitment. The partnerships enable credit unions to stretch their effectiveness and outreach capabilities.