The Consumer Voice

New Consumer Bureau Leadership Should Represent All Consumers

August 19th, 2010 by Gerri Guzman, Executive Director

The new financial reform bill calls for the creation of the Bureau of Consumer Financial Protection. Once the Bureau is created, it will regulate a wide variety of consumer financial services.

We hope that the reform bill will protect consumers with limited access to credit and not just consumers of traditional bank products.

The leader of the Bureau will set the agenda. This is why President Obama should choose a leader who will consider the perspective of ordinary Americans who rely on non-bank financial services to access credit.

Some “consumer advocates” are not always in touch with actual consumers like us.  They have probably never come up short between paychecks and don’t understand that a short-term loan can often be the best solution to take care of emergency needs. 

In order for this Bureau to be effective, the leader must consider the perspective of all consumers, especially those who traditionally have not had a voice or a place at the table- consumers of non-bank services.

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What About the 43 Million Underbanked?

July 27th, 2010 by Gerri Guzman, Executive Director

While some members of the Consumer Rights Coalition have told me they are confident Congress’ financial regulatory reform legislation is a step in the right direction, many remain concerned about how it will impact their access to credit. We are not referring to accessing credit for vacations, concert tickets, or a new dress to wear on date night; we are talking about accessing credit for a medical emergency, college books, or to pay a utility bill when we’re experiencing a shortfall in our budgets.

Our members use a variety of non-bank financial products to manage their households and many are nervous that a Consumer Financial Protection Bureau, part of the current regulatory reform bill, will regulate these services out of business, rather than make them better.

According to a recent FDIC survey, 21 million American households (about 43 million adults) have bank accounts but rely on non-bank financial services by choice. They are defined as “the underbanked.” Certain racial and ethnic minorities are more likely to be underbanked than the general population, including blacks, American Indians/Alaskans and Hispanics.

Rather than only focusing on protecting those who already have access to a variety of financial services, the new Consumer Financial Protection Bureau should also address the needs of our members and the millions of other underbanked Americans to access realistic and affordable financial products.

As long as the need for quick, convenient loans exists, non-banks should be able to continue to offer the financial services that the traditional banks will not. When an emergency arises and we need a short term, small dollar loan, it doesn’t make sense to be forced into longer term, higher dollar solutions provided by traditional banks. Long- term debt is the last thing we need while already struggling to meet our household responsibilities.

How can we bring “non-bank” financial products into the regulated financial system and how can we help people who use non-banks as a short-term solution build their credit histories so they can eventually graduate to a traditional bank? We need to make sure the new Consumer Federal Protection Bureau addresses these questions.

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Building Good Credit and Lowering Debt–Gerri’s Challenge #2

July 15th, 2010 by Gerri Guzman, Executive Director

Credit is a valuable and necessary financial tool. It can help you establish a credit history, make purchases conveniently, and take advantage of the benefits and services offered by credit issuers. But not managing your credit wisely can lead to:

  • Increased interest rates (APRs)
  • Penalty fees
  • A decline in your credit score
  • Denials of future credit

 For those of us who still have the option of using a credit card:

  • Scrutinize all credit card offers and terms, especially the “fine print.”
  • Don’t be fooled by teaser rates and cash advances.  Under current policy, teaser rates can last a much shorter amount of time than you might anticipate. 
  • Credit card cash advances have high interest rates and even a single cash advance can raise the interest paid decades later if an account is never paid in full. 
  • Credit card companies will use your monthly payment to pay off the amount due at lower interest rates before applying it to the amount that has a higher interest rate, like a cash advance.

 For those of us working on building our credit score and lowering debt, here is challenge #2.:

  • List all your debts (except the house) in order of smallest balance to largest.
  • Then pay the minimum payment to stay current on all the debts except the smallest.
  • Every dollar you can find from anywhere in your budget should be paid toward the smallest debt until it is paid in full.
  • Once the smallest debt is paid, the payment from that debt plus the monthly payment of your next smallest debt should be paid each month to pay off the next smallest debt.
  • When debt number two is paid off; you attack debt three, and so on.

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Overcoming Financial Trouble: Gerri’s Challenge

June 21st, 2010 by Gerri Guzman, Executive Director

This is a tough time for Americans and no one knows that better than the members of the Consumer Rights Coalition. Access to a variety of credit options is important for many reasons.  For some of us, short-term loans are a viable solution while we get through a temporary dry period.  Maybe our credit rating has suffered or we are in between jobs. Whatever the reason, we can do something to improve our credit status while we get back on our feet.

Whether you are on a fixed income, a college student, starting a family, or starting over financially, it is empowering to take action to improve your quality of life. You can begin by getting your finances in order.

I challenge you to take two steps toward financial stability today:

1-      The CRC website now has great tips and resources for overcoming financial trouble.  Be sure to visit this new section of our site and start getting your finances in order today!

2-      Start the following exercise with me:

It is important to understand your debt so let’s start off by gathering all your bills, even those you put aside every month without even opening up the envelope.  Make a list by your personal priority-

  • Rent/house payment
  • Utilities
  • Car payment
  • Insurance  (house, car, medical)
  • Cell phone
  • Credit card (1)
  • Credit card (2), etc.
  • Other misc.

Even if you have not paid a dime on a debt for years, put it on the list.  As we get a clear picture of where we stand financially,  we will get a better understanding of how we are going to start fixing the problem and get back on track to financial freedom.

Over the coming weeks, my blog will feature some easy steps to getting your financial house in order.  I encourage you to check back and take the challenge to build a healthy financial future. 

Let’s get going!

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What Does Financial Reform Mean?

May 26th, 2010 by Gerri Guzman, Executive Director

On May 20, 2010, the Senate passed sweeping legislation to tighten the rules governing the U.S. financial industry. The bill calls for new regulations aimed at making the failures that led to the 2008 financial crisis less likely in the future. Though it’s not the final bill President Obama will sign, the reforms are intended to create much greater transparency in certain areas. It would mandate a broad audit of the Federal Reserve and create a new government agency tasked with protecting consumers from predatory financial practices and products.

 This should be a victory for hard working families and our neighborhood small businesses and it should help us regain trust in a financial system that is not working for the majority of Americans. After all, we will now have a new consumer watchdog, the Consumer Financial Protection Bureau, that is focused on weeding out predatory lending and making sure lending doesn’t get out of control again.

 My concern is this: Who determines what is predatory and what we need protection from? In an attempt to protect us, will we be left with less financial options?

Once again, others who don’t walk in our shoes or don’t face the same financial challenges we do every month are making decisions for us.

Already your advocacy and voice has made a difference on this issue, so let’s not rest until we are invited to the table to discuss laws that protect and serve the interest of all Americans. Only we can speak to the type of financial services we need to meet our financial obligations and respond to our household emergencies.

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