With the recession hitting low-income residents particularly hard, a Seattle-based bank is being reorganized to help thousands of individuals not served by traditional financial institutions build financial stability, the Seattle Times reports.
With $2.3 million in funding and in-kind services from Boeing and the Gates, Medina, Seattle, and Safeco Insurance foundations, Express Credit Union will work to help the estimated 20 percent of Seattle adults who do not have a bank account and have to rely on expensive check-cashing outlets and payday lenders. The bank, which has been operating on a trial basis in its new configuration since February, will offer services designed to encourage good saving habits by up to 7,500 King County individuals over the next five years.
Among other things, the bank will offer short-term loans at a 15 percent interest rate — compared to rates as high as 390 percent charged by payday lenders — with 5 percent going into the client's savings account upon repayment. And because getting to the bank is often one of the biggest hurdles for low-income customers, Express will also maintain regular hours at sixteen nonprofit offices in the county. In addition, the bank's nonprofit arm, Express Advantage, will make grants to support financial education, credit counseling, and case management services in the county.
Express Credit Union vice president and COO Norma Hernandez said she hoped the new model would help many low-income families change habits that they have been unable to shake for generations. "I can only imagine how many more we can reach who otherwise would never have thought of how to handle their finances," said Hernandez, herself a longtime client of the bank. "I know [there are] a lot of people like me out there."