Are credit unions the key to financial inclusion?Written by Meg Kramig
To figure out what financial inclusion is, we must first define what financial exclusion is.
Financial exclusion refers to processes or systems that prevent poor, disadvantaged or geographically isolated social groups from gaining access to basic financial services such as savings accounts, loans, credit and other traditional banking services.
In 2017, approximately 14.1 million adults in the United States didn’t have access to bank accounts according to Georgetown University. For the general population, access to bank accounts means financial stability and economic mobility, whereas exclusion means economic insecurity and lack of upward mobility.
Individuals without access to a traditional bank have limited solutions available to protect their family from economic distress. Often, their only options include relying on payday lenders, commercial check cashers, automobile title lenders, and more. These services take advantage of the vulnerable, charging them high interest rates and trapping victims in a "debt cycle."
So how could credit unions help increase financial inclusion?
Credit unions rely on membership qualifications to join. It’s how they maintain their not-for-profit status. However, those qualifications have loosened considerably over the past couple of decades. Now, to join a credit union, you may just need to live in a particular state, or have a certain common occupation. The NCUA even specifically allows credit unions to serve those in underserved areas as one of their expansion guidelines.
With credit unions, underserved populations are given more economic opportunity. Instead of having access to just ONE financial institution (or even none in some cases), credit unions give populations access to multiple institutions so they can secure a more competitive offer. And seeing as credit unions already have a history of helping underserved communities over banks, that’s nothing but a good thing.
Finding a credit union without a physical location in your exact area can be hard, but MoveCU can help.
While the ability to join a credit union offers a new solution to underserved communities, that doesn’t mean FINDING one is just as easy. Especially if the credit unions available to you don’t have a physical location in your area.
So how does someone find a credit union if they don’t know where to look?
About MoveCU Inc.
MoveCU is the nation’s first credit union loan marketplace. Now users can instantly find, compare, apply for, and get pre-approval online in minutes on loans from credit unions around the U.S. Using their intuitive industry-leading technology, MoveCU is giving America’s smallest financial institutions a bigger voice and breathing new life into the credit union movement. For more information, visit our homepage.