Guest Columnist

Iowa credit unions are focused on consumers

The senate chambers are seen at the Iowa Capitol in Des Moines on Thursday, Dec. 19, 2019. (Andy Abeyta/The Gazette)
The senate chambers are seen at the Iowa Capitol in Des Moines on Thursday, Dec. 19, 2019. (Andy Abeyta/The Gazette)

It’s been a year of change, including our credit union’s name, but one thing that hasn’t changed is our commitment to members.

The simple truth is that our credit union’s member-owned foundation and “people helping people” philosophy is not dictated by the name on the exterior. Founded in 1934, our credit union has grown over the years but the not-for-profit, cooperatively-owned structure has continued to guide our service to Iowans and their everyday needs.

We see members that need help every day. Our commitment to helping Iowans is evident in our industry’s legislative priorities, which include addressing child care challenges, helping Iowans save more money and encouraging affordable housing options.

According to the United Ways of Iowa ALICE report (sponsored by the Iowa Credit Union Foundation), 47 percent of Iowans said they do not have an emergency savings net.

Here in Cedar Rapids, one-third of the households fall below the ALICE threshold. This means one out of every three neighbors, friends, family, or colleagues in our community is struggling to make ends meet. A simple inconvenience, like an unplanned doctor visit, can quickly spiral into the difficult choice of not buying groceries, paying for needed medication or having transportation to your job.

Iowa credit unions often help with these needs when banks won’t. Last year, GreenState originated more than 2,500 personal loans last year to help members with unexpected emergencies like medical or funeral expenses, helping them avoid predatory payday lenders.

The credit union industry wants to help Iowans improve their financial lives and afford basic needs. One policy opportunity is to partner with groups like United Way to solve the child care “Child Care Cliff Effect” felt by Iowa families who may lose their state child care assistance after receiving a raise as small as 15 cents an hour. A tiered phaseout would help motivate Iowa families to continue seeking professional growth, while gradually adjusting their household budget to receive less state assistance.

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Another opportunity to help Iowans save and grow their safety net is an innovative savings program called “Prize-linked Savings.” These programs are a proven way to creatively impact the savings crisis in our state, at no cost to consumers or the government.

Prize-linked savings programs are permitted for credit unions and banks in 33 states. The idea is to encourage saving through gamification, with savers earning chances to win a cash prize from their financial institutions without ever putting their money at risk. If you don’t win the drawing, you keep all the money you deposit, plus any interest earned.

Nationally, credit unions offering such programs have helped more than 80,000 members save an incredible $190 million since they started 10 years ago. The average participant has saved $2,400, and such an emergency fund would be vital in helping Iowa families prepare for unexpected expenses such as a health scare, home repair or that new set of tires.

A program like this is a proven tool to help people save, which we know is needed. A Federal Reserve study found that 44 percent of American households felt they would not have enough savings to cover a $400 emergency.

We look forward to working with the governor and Legislature on policy initiatives this upcoming session to help Iowans save more of their hard-earned money and grow our local communities.

Jeff Disterhoft is president & CEO of GreenState Credit Union.

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