Credit Unions Making Inroads In The Deep South
Getting a loan has always been difficult, but it’s never been harder than it has been for the past 10 years. Even before the global recession of 2008, computerized credit reports were making it difficult for many Americans—especially those living in rural areas—to get ahold of the money they needed for big purchases. Knowing a friendly face at the bank no longer holds any weight. If the computer says “no,” your personal relationship with the bank manager no longer matters.
Many people feel that the current situation isn’t fair, but banks aren’t known for being fair. Borrowing money has become like playing Bonanza slot on online slots websites. As you’ll know if you’re a gambler, you only win money from online slots when all of your symbols line up perfectly. Having two of the most valuable symbols in the online slots game on the same row means nothing unless they’re joined by a third or a fourth. That’s exactly how banks look at your credit report. You might have a perfect payment history on your mortgage or your car loan, but that one missed credit card payment from three years ago will see the door slammed in your face on all the best deals.
Not only are banks not lending, but they’re also packing up and leaving town. More than 50 percent of all the counties in the U.S. permanently lost access to branches between 2012 and 2017, with rural communities hit worst by the exodus. For a lot of people in smaller towns and cities in the Deep South that not only means they can’t get a loan or a mortgage, but it also means that there’s nowhere to go to have a face-to-face conversation with somebody about your application when it comes back rejected. Because of this, people are putting plans on hold. They’re not refurbishing or repairing their homes. They can’t help their children pay for their weddings. They’re forced to rely on savings for large expenses, and not everyone has savings to fall back on.
If the picture we’ve painted sounds grim, it’s because it is. A fair hearing when it comes to loan applications and personal finances should be the minimum that anyone can expect from the institutions that are supposed to look after and care for them, and rural communities aren’t getting that fair hearing from the banks. Fortunately, though, there’s another way. Credit unions are beginning to gain footholds all over the Deep South, and if you’ve been struggling to get any sense out of your bank for a long time, you may want to seek one out and make an appointment.
The basic difference between a bank and a credit union is that a bank exists to make money and deliver profits for shareholders and investors, whereas a credit union doesn’t make any profit at all. It exists to serve the people, and all the money that it makes is paid back out to its members in the form of loans and approved borrowing arrangements. As an idea, it sounds a little too socialist for the typically right-leaning South, but it isn’t a far-left scheme. It’s a system that’s designed to help communities look after each other and ensure that deserving people receive financial assistance and credit repair fast when they need it. It might be helpful to think of it as community banking.
We’ve already seen the idea of credit unions taking hold and gaining popularity in Alabama. When the Regions Bank decided that it wasn’t making enough money in the Mississippi Delta anymore, it pulled out and left a hole. The Hope Credit Union has since stepped into that hole and picked up four of the branches that Regions Bank shut down. Since setting up shop there, they’ve made it their mission to improve access to lending for individuals, businesses and community groups who struggle on low incomes and would never be given the time of day at a major bank. Since then, a new branch of the Redstone Federal Credit Union has appeared in Huntsville. The success of Hope Credit Union created demand, and more credit unions are appearing to fill it. They get a little federal assistance when doing so—as credit unions don’t make profits, they’re exempt from tax. That makes it easier for them to acquire premises and offer lending solutions to customers.
While the progress of credit unions across the Deep South is welcome and admirable, there’s still more work to be done in terms of awareness. The unfortunate fact of the matter is that not enough people know that the credit unions exist, and when their regular bank turns them down for finance, they believe they have no option but to turn to payday lenders or similar high-interest loans to get access to the cash that they need. Payday loans often come with interest rates of 1,000 percent APR or above, and so people who desperately need money often end up paying back far more than they can afford for the sake of borrowing a small amount of money in the short term. That’s how individuals—and sometimes entire families—end up trapped in a cycle of debt that they can’t get out of.
More will be done to improve access to credit unions in the Deep South area in the near future. Several prominent credit unions are currently looking into providing digital access to lending facilities for civilians living in rural areas, which will allow more people to make use of their facilities than ever before. For some families—those who had no realistic prospect of being able to acquire a loan at a reasonable rate in the short to medium term anyway—the closure of big-name banks should no longer be looked at as a negative. It might mean that a credit union is on the way, and a credit union is there to help you. You should always consult a qualified professional before making big decisions about loans and borrowing, but credit unions may be able to open the doors that big banks have closed to you.