New Kansas City credit union offers an alternative to predatory payday loans
Inside Subprime: March 2, 2018
By Alex Huntsberger
WeDevelopment Credit Union is slated to open in April of this year. They will have $2 million to lend out and enough donated funds (over $400,000) to cover their operating costs for the next two years, roughly a quarter of which was raised by local church groups.
The poor, primarily African-American population living in Kansas City’s urban core lacks access to banking institutions and services, and a combination of poor credit, systemic racism, and a mistrust of banks has led many of these residents to deal entirely in cash.
“There is a population out there whose needs are not being met and that is why we have the unbanked and the underbanked population and that is where credit unions come in and pick up the slack,” acting board chair Ajamu K. Webster told the Kansas City Star. “If it is not picked up by a credit union, it is picked up by predatory lenders and not by someone who will work in the best interest of the community.”
Star reporter Glenn Rice also noted that approximately 42 percent Kansas City’s African American population is classified as “unbanked” or “underbanked” by the federal government.
Dealing primarily with cash opens poor consumers up to predatory check-cashing fees. Especially in Missouri, where payday lenders can charge annual percentage rates (APRs) up to 1,950 percent (which is VERY high, even for a payday lender), having no access to traditional avenues of credit such as credit cards or loans from the neighborhood bank can mean impoverished consumers are forced to pay more when they need emergency cash.
Not only is Kansas City home to a number of notorious subprime lenders, but the state boasts four times as many payday lending storefronts than it does McDonald’s restaurants.
According to the Star, WeDevelopment Federal Credit Union will be open to Kansas City residents “who live in the area roughly bounded by the Missouri River on the north, 85th Street on the south, Troost Avenue on the west and Interstate 435 on the east. The service area also includes portions of the city’s West side.”
Their services will include checking and savings accounts, check cashing, personal loans, auto loans, and financial literacy. There will be a $25 fee to join and a $25 minimum deposit. The credit union’s leaders have said they expect at least 1,500 members to join.
To read more about predatory payday lending in Missouri, check out these resources:
- A Guide to Payday and Title Loans in Missouri
- Payday Lending Report: Kansas City
- Payday Lending Report: St. Louis