Credit Unions Provide Opportunity to Financially Underserved Populations

July 1st, 2015

According to the 2015 Assets & Opportunity Scorecard, which examines household financial security, Mississippi has the highest rates of unbanked and underbanked households in the nation. These rates, coupled with Mississippi’s
income poverty rate (also the highest in the nation), paint a grim picture of the state’s financially underserved population.

Thousands of Mississippians do not have access to basic financial tools, like an account with a bank or credit union, or use alternative financial services, like payday lenders. In Mississippi, almost half (47.3%) of households are either unbanked or underbanked, while 22.6 percent of households live in poverty. These are all key indicators of financial insecurity and instability. Bank and credit union accounts allow households to save and build a personal safety net, as well as build the positive credit history needed to access affordable credit.

Persistent Poverty MS-Map-01Last year, a report found that millions of households live at least partially outside the financial mainstream, i.e., use non-bank services, like payday loan providers—services that deplete rather than preserve income and wealth. Households that live outside the financial mainstream spend one-tenth of their annual income on interest and fees from non-bank services; the same amount that most Americans spend on food each year. They are also more likely to live in underserved communities known as “bank deserts.” Bank deserts are defined as ZIP Codes with zero or one bank branch. In Mississippi, 69 percent of ZIP Codes have zero or one bank branch – out 533 ZIP Codes in the State, 369 have one bank branch or fewer (See Map).

The data underscore the need to eliminate bank deserts and create opportunities for businesses and families, particularly in the low-income, small, rural communities where many of the underserved live. For example, HOPE Credit Union recently announced plans to open branches in Itta Bena and Moorhead, Mississippi, as part of its strategy to increase HOPE’s presence and impact in bank deserts across the Mid South region.

For more information about HOPE’s Mississippi Delta expansion plans, please visit http://hopefriends.org/

Sources:

Corporation for Enterprise Development. (2015). Assets and Opportunity Scorecard, 2015. Retrieved from http://assetsandopportunity.org/scorecard/

Office of Inspector General: United States Postal Service. (2014, January 27). Providing non-bank financial services for the underserved. Retrieved from http://www.uspsoig.gov/sites/default/files/document-library-files/2014/rarc-wp-14-007.pdf

 Jessica Shappley - Blog Tag-01