Fund Loans

There are approximately 23 million and counting unbanked and underserved Hispanics in the U.S. The Latino Community Credit Union’s guide Financial Education for Immigrantsoutlines the barriers that prevent use of conventional financial institutions by Hispanics. They include:

Cultural barriers: Most Latin American countries are much more cash-based than the U.S. Historical macroeconomic instability or political unrest has fostered a distrust of banking systems. Some Latin American nations do not have deposit insurance programs, deterring people from parking their savings in a bank.

Language and literacy barriers: A lack of English proficiency coupled with insufficient literacy adds to the existing confusion regarding finance and credit. Many conventional financial institutions do not offer services in Spanish.

Documentation issues: Many Hispanics and financial institutions misunderstand what kinds of documentation are needed to open an account with a financial institution.

Lack of use of conventional financial institutions: A lack of experience with financial institutions means unbanked Hispanics are unaware of how they can benefit from conventional FIs.

Lack of affordable and accessible financial services: To a certain extent, low-value customers are excluded from conventional financial institutions. Retail banks that rely solely on interest income may not be willing to accept customers with low depository balances.

Unbanked and underserved Hispanics address their financial consumer needs in several ways. Many keep large quantities of cash at home or on his or her person. They do not save, build credit and wealth, or plan for their financial future. Many use fringe-banking providers such as check cashers or pawn shops that charge exorbitant fees and interest rates. The vast majority of underbanked Hispanics overpay for sending remittances home to family and friends because they are unaware of cheap and safe alternatives.