The P.A.

A weekly address from Patrick Adams,
President of St. Louis Community Credit Union

Financial Education Can Help Jump Start The Economy

On January 25th, 2010, posted in: Uncategorized by

Well, well, well.  We crafted a very important message to the community this past week regarding the need for basic financial services and the impact it has on our local economy.  Guess what?  It was published by the St. Louis Business Journal.  We thought you might enjoy reading the article.  It will help you understand what St. Louis Community Credit Union is working diligently to accomplish in our great city:

Providing Basic Financial Services Creates Economic Stimulus

The prosperity of our region is needlessly at risk when individual households are financially unstable. The facts are brutal. St. Louis residents who don’t use a credit union or bank spend an additional $1,042 a year in check-cashing services according to the Pew Charitable Trust. 
 
An estimated 88,000 households in the St. Louis area do not have a checking or savings account according to a December report from the Federal Deposit Insurance Corporation (FDIC). African-American and low-income households are disproportionately affected. The Pew number multiplied by the household count means this region loses $91.7 million a year in consumer purchasing power.

Families that live in the cash world without access to financial services are at higher risk of theft and robbery. In addition to the costs of check cashing, there is little chance to save. Without the capacity to build assets, which includes buying a home or saving for education, our local economy ultimately takes a hit.

According to an August 2009 report from the FDIC, a lack of access to mainstream banking is a large contributor to the use of alternative credit services like payday loans and pawn shops. Over the past five years, banks added more than 10,000 full service branches nationwide. Yet, barely one in ten of those new branches were placed in low-income, minority neighborhoods. Considering that the majority of individuals choose a financial institution based on proximity, this leaves poorer communities and minority neighborhoods at higher risk.

Offering services in these neighborhoods is a challenge, but the FDIC report closes by calling government and industry across the country to jointly demonstrate a serious commitment to expanding cost-effective and safe financial services, as well as education to low-income and minority households.

Locally, collaborative efforts are already underway. The U.S. Department of Treasury used St. Louis as one of eight sites for a 2009 Community Financial Access Pilot (CFAP). Twenty-two banks, credit unions (including St. Louis Community Credit Union) and community service organizations participated. Results of the project which ended in December will be out soon.

This past week, The Greater St. Louis United Way coordinated a Martin Luther King Financial Education Blitz in conjunction with the National Day of Service. A wide range of community partners worked together to offer more than 20 financial stability workshops. It is the first of three such efforts this year. Businesses throughout the region should take this opportunity to get involved. Details are online at www.stl.unitedway.org/mlkday.

As we search for a means to jump-start our region’s economic engine, working in concert to provide meaningful financial education is a logical starting point. Information is power and may represent the needed catalyst to transform the unbanked and the under-banked households in our region to greater financial stability. There are $91.7 million reasons to make this happen.

The Number 15 Might Be More Significant Than You Think!

On January 19th, 2010, posted in: Uncategorized by

15 is just a number.  It doesn’t have much significance over any other number.  15 may even be considered dull compared to numbers that have significance.

When I think of the great numbers, I think of the ones that stand out.  1 is a great number; everyone wants to be number one. Ozzie Smith was #1.  16 is a great number – it’s when you can drive.  21 is pretty cool.  It usually means an awesome party.  But 15 – it is just kind of there; totally insignificant unless you think of April 15th (when taxes are due) and then it conjures up a lot of negative thoughts.

But at St. Louis Community Credit Union, we’ve been pressing forward to take 15 from the nothing world of just being another number to one of the best numbers foremost in the consumer’s mind. Yep, 15 (as in dollars) is about to be renowned as one of the best, most economical numbers in the St. Louis region – right up there with the current local favorite of 6.  You know, if the Cardinals score 6 runs, we all get 25 cent drinks at the local gas station.  That’s some economic stimulus worth noting.  Go Cardinals, go!!!  As the ad pitchman says: “6 is a serious number.”

$15 is all St. Louis Community Credit Union charges for an “insufficient funds” check.  That’s official speak for a “bounced check.”  That same $15 is all that is charged if a member activates their overdraft protection through a debit card transaction or a written check.  Compared to the average of other financial institutions, that’s just about half as much. See I told you – $15 just increased in popularity.

Now, we’re not big on you bouncing checks or using overdraft protection.  St. Louis Community Credit Union would much rather you balance your checkbook, keep track of your transactions, and live within your means.  In fact, we provide free debt counseling services to you, free financial education seminars and free credit counseling – all with improving your money management skills foremost in our mind.

Most folks don’t bounce checks; maybe never.  But “stuff” happens, and isn’t it nice to know that we’ve got your back – at only $15? Seriously, the national average cost for overdraft protection for the first item is $29.58.  That’s a $14.58 cent savings to the consumer.  That’s economic stimulus.

$14.58 saved equates to just under six gallons of gas.  $14.58 saved equates to almost three $5 foot-longs at Subway.  So what’s that, about 2 ft. 7 inches of sandwich?  $14.58 is a couple of Netflix.  $14.58 is a couple of on-demand movies and some popcorn.  $14.58 is more pizza (it doesn’t matter how much – any amount of pizza is good).  $14.58 is a whole bunch of texting.  $14.58 is a couple of Starbucks – and throw in a blueberry muffin.

Yeah, don’t bounce a check.  And for the sake of your long-term financial well-being, get off the overdraft elixir.  But seriously, if you screw up, isn’t it better to have your checking account with us than those guys who charge twice as much?  Maybe 15 is a serious number after all!

Our Tax Dollars Are Supporting Bad Banking Practices

On January 11th, 2010, posted in: Uncategorized by

I’m a little ticked off.  My tax dollars (yours, too) are being used to prop up GMAC’s banking entity, Ally Bank.  Being a credit union guy, I want to support credit unions.

You might suggest that I take a chill pill.  After all, that’s what the TARP money, aka government bailout, is all about – propping up a banking industry that was in deep need of some help.  (By the way, as a sidebar to this discussion you should probably know that St. Louis Community Credit Union didn’t need any TARP money.  Why not?  Well, we never took the risks associated with chasing the exotic world of mortgages and/or investments.  Without the risks there was no need for the bailout…You’re welcome.) 

You’re probably familiar with Ally Bank.  They’re the ones that have those clever commercials with kids, ponies, model cars and bikes.  The ads tease the youngsters with the spoils of being a kid only to have the full joy of receiving such great present(s) taken away by some hidden, undisclosed set of rules.  The less than subliminal inference is that banks tease you with their attractive offers and then dampen your joy by applying account restrictions.  Of course, Ally is different – or so they claim.  It’s a page straight out of the credit union playbook except Ally is for-profit and we’re not-for-profit, a thought you should tuck away and remember forever and ever and ever and ever.

Here’s the crux of my discontent.  Our members’ (mine and your) tax dollars are being used to create and run some really clever ads both on TV and in print to entice consumers (who include credit union members) to move their money to Ally Bank.  Let me get this straight…I’m helping Ally Bank to be successful at the expense of the credit union and my own well-being.  To draw a parallel, wouldn’t you think it crazy if I told you that Pepsi gave Coke some money to help them run more TV ads?  Yep, crazy is the right word.

Now here’s where I really get fussy.  The clever, thought-provoking ads are offering really high deposit rates.  I mean really high deposit rates.  Super-duper, out of the market, out of the world rates compared to SLCCU and the other banks and credit unions throughout our area.  So again, let’s do the math.  They can offer higher rates because you and I are providing tax dollars that allow them to do so.  What in the wide, wide world of sports is going on here?

You’ll find it interesting that the FDIC (bank insurer) is not pleased with the high-cost deposits that Ally Bank is placing on their balance sheet.  Why might the FDIC be concerned and order a “cease & desist” action?  Remember, the FDIC is the insurer and maybe (just maybe) they have interest in the potential risk related to Ally’s actions.

What’s next, more tax dollars going to assist (bail out) the bad banking practices currently being perpetuated by Ally?  Yep, it’s getting ready to happen: $5 billion more to Ally.  I just thought I’d let you know what’s happening.

 

Make 2010 A Financial Success

On January 4th, 2010, posted in: Uncategorized by

Too early for golf talk?  Nope.  I’ve got some serious cabin fever and I’m ready to play some “stick.”

My buddy “Hoos” is one of my favorite playing partners.  He doesn’t take himself or the game very seriously – that’s a prerequisite for playing golf with me.  I’m not very good and usually find myself wanting to be home about 20 minutes into the round.  Work is serious.  Golf, not so much.

Don’t misinterpret Hoos’ lax manner on the golf course for a lack of competitiveness.  A putt more than a foot or two, and the cat gets his tongue.  He gives up putts – far and few between.  The man does not have the word “gimme” in his vocabulary – especially on any putt outside of the leather or as Hoos likes to call them, those with “a little chicken on the bone.”  That’s Hoos’ vernacular for “you got some work to do.”

Well, as consumers enter the New Year, many have a financial picture that has some serious “chicken on the bone.”  Here are some ideas to assist in making 2010 a financial success:

Start a budget.  Make a commitment and stick to it.  Just like taking a shower or eating, make effective money management something you do on a daily basis.  To help commit, involve a trusted confidant who can assist with keeping you on the straight and narrow.  Between commitment and a trusted confidant to help, you can start cleaning up your personal financial statement.  Telling someone forces your hand to perform.

Slow the cash leaks.  Vending machines, newspapers, a cup of coffee, lunch, dinner out three nights a week, etc.  You get the idea.  There’s a hole in your pocket – fix it.

Save some money.  Start with the cash leaks just mentioned.  While never easy, it is essential to save for that “rainy day.”  Have something to fall back on when the proverbial “stuff hits the fan.”  When you design your budget, be sure to put “saving” as a line item somewhere near the top.  Start small and celebrate your progress.  $5 per week is $260 per year – that equates to an emergency car repair.  Your new-found “rainy day fund” keeps you from borrowing or overdrawing your account; now you’re getting ahead.

Stay off the credit card.  Understand the difference between what you need and what you want.  Cash at the register makes much more sense than adding to a credit balance that has a half-life of eternity.  They call it a cash register, not a credit register.  Put the plastic away or use it sparingly – please!

Yep.  As Hoos would say, there is “some chicken on the bone.”  Many folks have some work to be done.  Another golf reference is “keep it in the short grass.”  That means don’t end up out-of-bounds.  Yep, that applies as well.  Get busy and make 2010 a great year.