Insights into the financial needs of very low income consumers

Trust is key to moving very low income consumers from crisis to greater financial stability
NEW YORK, NY (January 30, 2015) — The National Federation of Community Development Credit Unions (Federation) has released From Distrust to Inclusion: insights into the Financial Lives of Very Low Income Consumers, a report from the Federation on research into the financial needs of very low-income consumers, those with annual household incomes of less than $20,000. The purpose of the study was to determine whether very low income consumers constitute a market segment separate from low to moderate income consumers and to investigate how socially-minded financial institutions could best meet the needs of these consumers. The study was funded by the Ford Foundation with additional support from the Annie E. Casey Foundation.
Fifty interviews were conducted in four financial institutions: Community Check Cashing in Oakland, CA; Guadalupe Credit Union in Sante Fe, NM; Self-Help Community Trust/Prospera in San Jose, CA; and St. Louis Community Credit Union in St. Louis, MO. All of the participating financial institutions were credit unions with the exception of Community Check Cashing which is a non-profit, full-service check cashing store.

Kirsten Moy, Senior Fellow with the Economic Opportunities Program at the Aspen Institute, commented on one of the most striking observations coming out of the research, “Many of the very low income people we interviewed found their way to a participating financial institution because they were experiencing a financial crisis or a life crisis with financial implications. It was only after their immediate crisis had been resolved that the very low income consumers we interviewed were receptive to more traditional financial solutions like counseling, budgeting or saving. Very low income consumers were only able to move ahead when a trusting relationship was developed with the staff of the credit union.”

The importance of trust and the value of relationships was one of the key findings of the study, along with:
  • Instability and volatility of income is the norm for these consumers
  • While very low-income consumers are aware of and access information through mobile technologies, few trust making decisions or transactions via mobile banking platforms
  • Very low income consumers still depend largely on cash 
  • Traditional budgets are not helpful in managing household finances
  • Products and services must fit within the context of a very low income person’s life, not just their financial profile
Cathie Mahon, Federation President and CEO, says “Every day mission-driven financial institutions, particularly credit unions, search for the right mix of of products and services to help members of their low-income communities gain financial independence. In some ways the learnings from this study are more provocative than conclusive. Most of our efforts have focused on developing new scaleable products and technologies, but very low income people value trusted relationships most. Individuals and communities will benefit if our industry can increase the financial stability of the very low income. Improvements can only be expected when we are able to develop products and services that mesh with and support the unique circumstances of these consumers’ lives.”

For more insights into the lives of the very low income and to read the full report, visit .

About the Federation
The National Federation of Community Development Credit Unions is a certified CDFI Intermediary representing nearly 200 community development credit unions (CDCUs). The Federation’s member CDCUs provide credit, savings, transaction services and financial education to more than 4 million residents of low-income urban, rural and reservation-based communities across the US, and hold over $32.5 billion in community-controlled assets. Founded in 1974, the Federation is headquartered in Lower Manhattan with offices in Madison, WI. The Federation offers a wide range of advocacy, educational, training, investment, marketing, and outreach programs to support and assist CDCUs. For more information about the Federation and its programs, please visit

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