Testimony on alternatives to high-cost financial products before Assembly Subcommittee on Banking in Underserved Communities

NEW YORK, NY (November 25, 2014) — Today the National Federation of Community Development Credit Unions (Federation) testified before the Assembly Subcommittee on Banking in Underserved Communities in New York City on the Federation’s Borrow and SaveTM program. The hearing examined the establishment of a Borrow and Save pilot program in New York State.

Borrow and SaveTM is a small dollar loan coupled with a savings component, providing access to affordable credit while building assets to self-fund future bills or emergencies. The Federation’s mission is to help low- and moderate-income people achieve financial independence through credit unions. Combatting predatory lending is central to the Federation’s mission and led to the development of the Borrow and SaveTM program.

Borrow and SaveTM is structured as an amortizing small dollar loan with a required savings component. Consumers borrow between $300 and $3,000, and 10-50 percent of the loan balance is placed in a restricted savings account for the term of the loan. Loans range from three to 12 months and credit unions price the loans affordably, with rates ranging from 15 to 28 percent. When the loan is repaid, the borrower has savings which helps build credit. Income verification is required for the loan to ensure borrowers can repay, but Borrow and SaveTM has no minimum credit  score to ensure broad access to consumers who might otherwise rely on predatory lenders.

The Federation first tested Borrow and SaveTM in 2011 with three credit unions. Over the course of this initial pilot 406 loans were made for $584,000 and borrowers accumulated $256,000 in savings. Repayment was strong with delinquency rates averaging around 4 percent.

Based on the success of the initial testing, Borrow and SaveTM was selected to participate in the Filene Research Institute’s Accessible Financial Services Incubator. Twelve credit unions from New York to California are offering Borrow and SaveTM through the Incubator pilot. (See the list of credit unions in the Incubator below.) Since May of this year when the pilot started, participating credit unions have deployed 1,000 loans totaling nearly $1.2 million and borrowers have collectively amassed $461,000 in savings.

Ann Solomon, Strategic Initiatives Manager at the Federation, provided today’s testimony, “We see from the initial reports that Borrow and Save is successfully providing access to credit for low-income borrowers with damaged credit or no credit history. Borrowers in the Incubator have an average income of roughly $30,000 and typical credit scores are below 600. For many of the participating credit unions, Borrow and Save has been a great way to provide access to credit to individuals who are not eligible for more traditional loans. Borrow and Save can also serve as a stepping-stone for individuals to improve their credit and, over time, to access conventional loans at lower interest rates.”

The Accessible Financial Services Incubator runs through the summer of 2015. For credit unions interested in learning more about the Borrow and SaveTM program, contact Pamela Owens, VP of Programs, at

1199 SEIU Federal Credit Union – New York, NY
Carter Federal Credit Union – Springhill, LA
Communicating Arts Credit Union –  Detroit, MI
Freedom First Federal Credit Union – Roanoke, VA
Guadalupe Credit Union – Santa Fe, NM
Hope Credit Union – Jackson, MS
Lake Trust Credit Union – Lansing, MI
North Side Community Federal Credit Union – Chicago, IL
Peninsula Community Federal Credit Union – Shelton, WA
Seasons Federal Credit Union – Middletown, CT
SkyOne Federal Credit Union – Hawthorne, CA
Southwest 66 Credit Union – Odessa, TX

About the Federation
The National Federation of Community Development Credit Unions is a certified CDFI Intermediary representing more than 200 community development credit unions (CDCUs). The Federation’s member CDCUs
provide credit, savings, transaction services and financial education to more than 2.5 million residents of low-income urban, rural and reservation-based communities across the US, and hold over $20 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  

More News