If you see a neon sign on a storefront reading “cambio de cheques” (check cashing), you probably think it’s just like any other check-cashing and payday loan purveyor out there.
But while the Community Trust Prospera in East San Jose, California, is situated in a strip mall next to a beauty shop (like many other check-cashing joints), it’s anything but your typical check-to-cash operation.
The Community Trust Prospera is actually a credit union, offering its patrons (many of which are Latino) much more than just quick access to greenbacks. It provides patrons the opportunity to build their credit.
Many immigrants conduct their lives on a cash-only basis, steering clear of intimidating banks. Last year, the National Council of La Raza estimated that 20 percent of Latinos in America don’t use banks, a higher rate of bank avoidance than what is found among any other group.
In response, Self-Help Federal Credit Union has opened six branches including Community Trust Prospera in San Jose and Los Angeles to try to reach some of these underserved communities. These branches now boast 11,000 members, who have socked away a whopping $1.3 million in savings.
Community Trust Prospera offers many of the same services that check-cashing and payday loan establishments do, but without the oft-typical predatory interest rates and fees. Alexia Fernández Campbell of National Journal spoke to Darwin Morán, who uses the financial institution to wire money to his family in El Salvador and to cash checks from his landscaping work. Initially, he resisted opening a bank account, but the staff there finally convinced him to.
“I started to become friends with them and slowly I started to change my mind,” Morán told Fernández Campbell. “Fixing my credit and paying my debts was so important to me,” he said.
Improved credit and a bank account gives low-income people a greater ability to rent an apartment. And taking advantage of programs such as Community Trust Prospera’s Fresh Start Loan (which is a type of loan that requires a deposit), eliminates the need to visit payday lenders — yet another important step towards establishing a more secure financial future.