A member came into our client’s financial center in tears. Her 15 year-old car, which she used for commuting to her two jobs, had just broken down. She needed $300 to pay for the repairs and she had a total of $120 in her accounts; payday was 8 days away. Now what?
I’m sure your credit union has stories like this and works hard to find a solution when faced with these issues. I’m grateful CU’s operate under the philosophy of ‘people helping people’. But are we solving the underlying problem?
A 2017 survey by the Federal Reserve reported almost half of Americans don’t have enough savings to cover a $400 emergency, and it’s a safe bet a big percentage of those people are doing business with credit unions. How do we help those people make meaningful progress toward an emergency savings fund? We are doing good things, but how do we do great things?
A great place to start: tax refunds. In 2018, 84% of households making less than $51,000 are expected to receive a tax refund and the average expected amount was between $2,100 - $2,500. When households were asked what they planned to do with it, 32% indicated they had no real plans. This is a huge opportunity for credit unions to help members build their savings funds.
Smart CU leaders are trying something new: Tax Time Savings Program. This program has been tested in real-life credit union conditions to increase the amount of savings resulting from tax refunds. Remarkably, the most successful approach resulted in members saving an average of 35% of their tax refund, almost twice as much as members not enrolled in the program.
If you could get your members to save just 25% of the average tax refund, they would have $400 toward a necessary emergency fund. Join other smart credit union leaders who are doing great things to make a difference with their members.