Why is education for low wealth households important?

An estimated 7.7% of U.S. households, or approximately 9 million are unbanked. Another 21 million households are under-banked, meaning they have accounts at financial institutions, but do much of their financial business with alternative services such as payday loans and check cashers. Such services may be convenient, but are costly for households and have no means or incentives to help households build assets and wealth. Financial education is a means to help low wealth households break out of the cycle of debt. Remedial programs focus on helping people reduce their debt service burdens and address outstanding concerns about credit problems.

Why should credit unions care?

Consumers, and especially under-served consumers, need to be equipped with knowledge and skills to evaluate their options and identify those that best suit their needs and circumstances. Financial literacy can empower consumers to be better shoppers, enabling them to obtain goods and services at lower cost. This optimizes their household budgets, giving them more opportunity to consume, save or invest. Unbanked and under-banked households represent immense opportunity as potential members for credit unions. Through financial education programs, these new members can become well-informed consumers that can lead to more productive loan and savings business for the credit union.

What can credit unions do?

Many credit unions work with low-wealth individuals and households one-on-one or in small groups to provide meaningful information and hands-on skills. But credit unions can reach more people – members, potential members, and the community at large – by partnering and collaborating with community-based organizations to deliver knowledge and skills. Through such partnerships, credit unions are not only helping under-served individuals but providing an important service to the communities.

(None listed.)