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Low-income credit unions show members how to tighten purse strings

By Julia MaloneStaff correspondent of the Christian Science Monitor / December 10, 1980


The storefront office with its assorted donated furniture and secondhand adding machines hardly resembles a posh financial institution. the walls are decorated with a picture of football hero Johnny Unitas and a poster board with snapshots of neighborhood children.

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But North Greenmount Federal Community Development Credit Union is an inviting place for its low-income, north central Baltimore neighbors. Behind the teller's window, a local resident and former teacher's aide cashes checks and takes deposits from her customers, most of whom she knows by name.

"See how much you've got. Aren't you proud of that?" she applauds a teen-age boy making a deposit. Many of the credit union members are learning to save money for the first time.

The Baltimore credit union is among the some 600 low-income groups forming the "community development credit union" movement nationwide. Behind it is the idea that while one family may have little money and no change of getting credit from a bank, a whole neighborhood can band together and gather thousands, sometimes millions, of dollars. And they can use that money to help each other.

Although these groups control only about $50 million of the nation's billions , they measure their success instead in the changed lives of individual customers. their aim, which sometimes takes on the fervor of a crusade, is to help low-income members learn to control their own lives and purse strings.

They point to success stories like Diane Wilson.

Not long ago Mrs. Wilson was afraid to go out the front door of her rented Baltimore home because she might meet a bill collector coming in. She dreaded answering the telephone, thinking the caller would be a creditor.

But now, for the first time since her husband died and left her with three children and a handful of bills 16 years ago, she is living within her modest salary. She says the North Greenmount Credit Union is the difference.

"They counsel you," she says, explaining that the credit union lent her enough to pay off all of her other loans. The catch was that she first had to agree to live by a budget. Out of her weekly paycheck from her clerical job, she keeps $50 for expenses. The rest goes to the credit union to repay her loan and build a special energy account so that when fuel bills mount this winter, she'll be able to pay them.

Today, she says, "I'm on top." She has a few hundred dollars in her energy account, her bills are paid on time, and she even had enough money to take a modest vacation last summer, her first in many years.

Most important, she says, "I've broken the credit habit," which she compares with an alcohol or drug addiction. When department stores sent out door-to-door salesmen carrying stacks of linens and blankets, as is typical in low-income areas, the temptation was once too great, she recalls.

"You don't have the niceties," she says. "There's a sick excitement.You think, 'Boy, I've fooled them. Look what I've gotten, and I haven't paid a thing.'"

Then the bills came, and the late charges, and soon the late charges were greater than the item cost in the first place.