Latino-friendly credit unions aim to help people who have traditionally been underserved by the American banking system. This includes immigrants, especially from Latin America, who often avoid banks. But a bank account means having a safe place to keep cash and pay bills (regardless of your citizenship or immigration status).
The percentage of unbanked Hispanic or Latino households in the U.S., at 16.2%, is more than double the national rate, according to the Federal Deposit Insurance Corp.’s most recent survey of unbanked households. And nearly 30% of Latino households are underbanked, meaning they have bank accounts but also use alternative financial providers such as check cashers, payday lenders or remittance transfer providers.
The reasons these households are underserved by banking institutions vary. About a third of the Latino population in the U.S. is foreign born, according to 2015 research by the Pew Research Center. And being from a different country can impact people’s views of banks in general. (Argentina, for example, has endured a history of banks not protecting customers’ money during economic crises.) Language barriers and a lack of traditional identification that banks accept, such as Social Security numbers, also play a role.
But credit unions, the not-for-profit equivalent of banks, are known for focusing on local communities. Especially in the past decade, many have committed to helping this underserved community.
How Latino credit unions stand out
Nearly 80 credit unions belong to a nationwide program called Juntos Avanzamos (Together We Advance), which requires participating credit unions to provide affordable and accessible banking products to Latinos. The practices vary by credit union, but these are common:
- Allowing applicants to provide foreign identification, such as a foreign passport and a matrícula consular, ID cards issued by Mexican and other governments for citizens who reside outside their home countries
- Providing affordable banking services, such as money orders, check cashing, credit-building loans, second-chance checking or other products
- Accepting loan applicants based on alternative credit histories such as records of rent or utility payments and letting identification be in the form of Individual Taxpayer Identification Numbers, given to foreign nationals who work in the U.S. and don’t have Social Security numbers
- Having English and Spanish materials as well as bilingual staff
- Having Latinos on a credit union’s board of directors and executive team
- Offering financial education through classes and financial coaching (for building credit, saving, buying a home, starting a business or other topics)
“What we’re doing with Juntos Avanzamos,” says Pablo DeFilippi, is to ensure that participating credit unions “provide services that are relevant and transparent.” DeFilippi is senior vice president of membership and network engagement at the National Federation of Community Development Credit Unions, which is leading the national rollout of Juntos Avanzamos.
The Juntos Avanzamos designation is an easy way to spot Latino-friendly credit unions, but there are other ways. The North Carolina-based Latino Community Credit Union promotes a similar mission.
“Every time we talk with a member, we take the time to explain everything,” says Silvia Rincón, vice president of communications and brand management at Latino Community Credit Union. “We understand that people who come to this country don’t know how our financial institutions work.”
In addition, one of Latino Community Credit Union’s most notable products that’s available to all its members is the Dreamer Loan, which covers the full cost of the Deferred Action for Childhood Arrivals application.