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The Mexican Consulate in Los Angeles plans to educate Latinos about opening bank accounts.
Later this year, the consulate will work with Clearpoint Credit Counseling Solutions, a non-profit organization with four offices in Los Angeles.
Latinos are one of the groups least likely to invest in a bank account. A 2009 Federal Deposit Insurance Corporation (FDIC) survey found that 43 percent of Latinos are “unbanked” or “underbanked.”
Underbanked households are those that have a checking or savings account but rely on financial serces like payday loans, check cashing services, rent-to-own agreements and pawn shops
Clearpoint president Martha Lucey says these services can be costly.
“I think that there can be a distrust of financial institutions that may be culturally based and, depending on people’s country of origin, they may not have had a banking system that has the type of protection we have in the United States with the FDIC,” Lucey said. “The combination of factors makes it less likely for Hispanic households to be banked, and that’s an opportunity for us to talk about the benefits of getting into a formal banking relationship, and how it can actually save a family money over using cash.”
A Pew Hispanic Center report found that many Latino immigrant remittance senders (those who regularly sent money to Latin America) held skeptical views of banks.
Lucey echoed the Center’s findings, identifying mistrust as one of many factors why many Latinos don’t deposit their money in banks.
“Having to pay to cash your check takes money out of your pocket,” Lucey said. “Having to pay to purchase money orders to pay your utilities or rent or mortgage costs the family money as well. If folks can get a low-cost checking account, to be able to write checks or do electronic transfers for those services, families are going to be able to keep more money in their pockets.”
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