This article contained an incomplete name for the chief advocacy officer of the Maryland and D.C. Credit Union Association. She is Jennifer Porter Gore, not Jennifer Porter.
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Credit Unions Slowly Fill Void As Payday Lenders Leave D.C.
Stephanie Vann got a loan from a credit union at 16 percent, a far lower rate than a payday lender would have offered.
(By Marvin Joseph -- The Washington Post)
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Some activists say Washington's credit unions haven't courted low-income customers aggressively enough. "I think they have made an effort," Reid said. "I do think they could make a greater effort."
Many in the credit-union industry acknowledge that marketing and outreach have never been their strong suit. Traditionally, they have focused on advertising to existing members. They also have limited budgets and typically stress a risk-averse approach in managing their members' money.
But credit unions are evolving, said David Colby, chief economist at CUNA Mutual Group, a financial-services provider for credit unions and their members. More credit unions have been granted community-based charters in the past five years, allowing them to do business outside their traditional membership base. As a result, they're slowly acquiring new skills.
"[Credit unions] are in their formative years of learning to deal with the community charter and learning marketing," he said.
D.C. Council member Mary M. Cheh (D-Ward 3), who spearheaded the legislative battle to pass the interest cap, said that finding replacement institutions for the payday shops was crucial. She consulted with banks and finance companies, and together they decided that the District's credit unions seemed best suited for the role.
"They were enthusiastic and looking into it and prepared to fill the breach," Cheh said.
It was partly a matter of timing. In the past few years, many credit unions around the country, especially ones serving the military, realized that their members were borrowing from payday lenders. By the time Cheh was trying to pass the interest rate cap, several had already begun offering payday alternatives, including a few in the District.
"It was kind of a convergence of two different trends," said Jennifer Porter, chief advocacy officer at the Maryland and D.C. Credit Union Association.
The HEW Federal Credit Union, which does a significant amount of its business in Anacostia, has run a program issuing small-dollar, six-month loans for decades. But it began promoting such loans as payday alternatives only in 2007, during the legislative debate, and it has since seen an uptick in the business. Like many other credit unions, though, it has found it difficult to keep those customers.
"I think the community sees it as an easy fix," said Gloria Bowden, HEW's senior vice president. "It's hard to get persons to talk to our financial counselor so that we can get their financial status in a better position."
