WASHINGTON (1/5/09)—A year ahead of schedule, REAL Solutions--the signature program of the National Credit Union Foundation (NCUF)--is reaching credit unions in 30 states.
NCUF Executive Director Steve Delfin presents REAL Solutions’ Steer Clear report to the Credit Union Advisory Board of Enterprise Car Sales, a corporate supporter of NCUF. (Photo provided by the National Credit Union Foundation)
“As millions of consumers faced an uncertain economy in 2008, REAL Solutions became an even more critical strategy,” said NCUF Executive Director Steve Delfin. “The program has evolved beyond products and services. REAL Solutions is now a documented business strategy for credit unions to grow their memberships by serving the underserved.” State credit union leagues surveyed “strongly agree” that “REAL Solutions is a valuable program for leagues.” Nearly all reported that it helps credit unions serve members with “low wealth.” Low-wealth members include people with low income or modest means, and those with moderate and middle incomes who are struggling to save and build assets. Cornell University in a Filene Research Institute report concluded, “The REAL Solutions initiative illustrates the type of strategy credit unions could adopt to successfully engage the underserved financial market.” (News Now
Aug. 4, 2008). The Credit Union National Association (CUNA) Membership Growth Task Force last year released recommendations to “assist credit unions in reaching out to new markets.” The task force recommended “encouraging credit unions to develop more community partnerships, encouraging more participation in REAL Solutions, and continuing advocacy efforts aimed at legal and regulatory changes to make service to new markets easier.” (News Now
July 2, 2008). “The most successful services are not only affordable for consumers, but also sustainable for credit unions,” said REAL Solutions National Program Director Lois Kitsch. “Sustainable services become a permanent part of credit unions’ business plans--as opposed to ‘loss leaders’ that must be limited in volume or subsidized by other parts of the credit unions’ operations.” The American Association of Credit Union Leagues (AACUL) leveraged the REAL Solutions brand when designing the REAL Deal, a new outreach initiative advanced by AACUL with CUNA and NCUF. REAL Solutions became an integral component of the first REAL Deal outreach framework model: Among the most popular REAL Solutions services chosen by credit unions and leagues:
* Payday Loan Alternatives--In 2008, more than 200 REAL Solutions credit unions disbursed $70 million in payday loan alternatives to more than 25,000 members. REAL Solutions credit unions aim to provide the loans as alternatives for borrowers who pay more than 300% annual percentage rate (APR) at payday lenders. Borrowers who received payday loan alternatives from REAL Solutions credit unions saved about $8 million in interest and fees. Many members paid off their credit union loans without rolling them over. * Voluntary Income Tax Assistance (VITA)--Nearly 100 REAL Solutions credit unions provided volunteer income tax assistance in 2008. VITA sites help workers who earn under $42,000 apply for Earned Income Tax Credits. By offering free tax preparation, free electronic filing, and free refund deposits, REAL Solutions credit unions saved low-income tax filers about $20 million. REAL Solutions credit unions also steered many tax filers away from costly refund anticipation loans (RALs) promoted by for-profit tax preparers. This saved tax filers from RAL rates as high as 2,000% APR. * Non-Prime Auto Loans--Nearly 92% REAL Solutions credit unions offer non-prime auto loans to help borrowers with low-to-moderate incomes, low credit scores, and thin credit files afford used cars. NCUF released its first research report, Steer Clear: How Credit Unions Help Car Buyers Avoid Predatory Loans, which demonstrated how credit unions could gain a sustainable share of the non-prime market where eight million used cars are sold each year.