A California credit union serving more than 84,000 has launched a pair of new products aimed at helping consumers build a credit profile and access mainstream financial products, joining a wider initiative in Los Angeles to make services available to unbanked and underbanked individuals.
Financial Partners Credit Union is offering the EZ Card, which the institution bills as a “checkless” checking account. The accounts are free of overdraft charges, the credit union said, and monthly fees are waived when consumers make monthly deposits of at least $100 or use the EZ card for purchases at least 10 times a month.
Credit union members with an EZ Card account have free access to over 30,000 ATMs nationwide, along with Financial Partners’ digital banking services.
Another new offering, the credit union’s Credit Builder Loan, is designed to help consumers build a credit history or repair their poor credit. The loan amount is deposited by the credit union and held in a savings account until the loan is paid in full. For a year, consumers make monthly payments that are reported to the three credit bureaus. After making 12 months of on-time payments, the loan is paid in full and the credit union member has access to the funds.
“About 25% of households in the U.S. still don’t have a savings or checking account and rely on expensive and often predatory institutions for financial services,” said Nader Moghaddam, president and CEO of Financial Partners Credit Union. “Our goal is to help Angelenos build financially successful lives and these products are a fantastic way to start.”
The new products were launched as part of the BankOn initiative, which strives to bring affordable financial products to consumers who lack access or elect to bypass traditional banking services. For many consumers, the inability to meet account minimums or afford account charges can present barriers to tapping into traditional financial services.
Facing such hurdles, consumers turn to check-cashing services, payday loans, prepaid debit cards and other alternatives.
According to the Federal Deposit Insurance Corporation, 7% of Americans lack a bank account, and as many as one in four Americans lack adequate access to services typically offered by credit unions and banks. The University of Pennsylvania’s Wharton School of Business has found that avoiding traditional financial services can be costly for consumers in the long term.