Credit Unions Embrace Community ID Initiative to Steer Immigrants Away from Palm Beach Payday Loans

Inside Subprime: August 12, 2019

By Lindsay Frankel

Since February, hundreds of undocumented immigrants and others without identification have stood in line in downtown West Palm Beach, Florida, to apply for a community ID card, an alternative form of identification being adopted in cities across the country. That’s after West Palm city commissioners approved the initiative and allocated $20,000 to Legal Aid for costs associated with processing and sending out the ID cards.

Now, a West Palm Beach-based CDFI certified credit union is expressing its support for the initiative, along with a national network of CDFIs dedicated to increasing financial inclusion.

Undocumented immigrants report that not having an ID presents a significant barrier to success in U.S. society. While financial institutions aren’t required to verify an applicant’s citizenship, many undocumented immigrants are turned away from banks due to a lack of identification. As a result, they often turn to predatory businesses and products such as payday loans and check cashers. Florida payday loans carry an average APR of 304 percent, according to the most recent data from Pew Charitable Trusts. Check cashing services are also unnecessarily costly. These alternative financial services can drive low-income, undocumented immigrants into debt.

Guardians Credit Union was given its Juntos Avanzamos status earlier this year. Translating to “Together We Advance,” the designation establishes the credit union’s dedication to empowering Hispanic and immigrant consumers through safe and affordable access to financial services. Credit Unions with this designation hire bilingual staff and take alternative forms of identification.

Juli Lewis, Director of the Southeastern Credit Union Foundation, also noted her support for the Community ID initiative. “Community IDs are an important step towards a more inclusive life for immigrants in our communities. The IDs will help them establish themselves with traditional financial institutions and avoid high-cost fringe providers like check cashing stores and payday lenders. This can help them earn interest on savings and reduce transaction costs, allowing them to stimulate the local economy through spending and to get back on the road to a more successful financial future,” she said.


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