Una nueva oportunidad para proteger a los consumidores de las altas tasas de interés y los préstamos abusivos
El senador Bernie Sanders y la representante Alexandria Ocasio-Cortez propusieron un límite en las tasas de interés para tarjetas de crédito y otros préstamos de consumo a una tasa anual del 15 por ciento, para ayudar a los consumidores que enfrentan crecientes deudas de tarjetas de crédito.
El proyecto de ley impondría restricciones a los préstamos a corto plazo, como los préstamos de día de pago, que dependen de tasas de interés significativamente más altas. En California, un préstamo de día de pago puede tener una tasa de interés de alrededor del 460 por ciento para un préstamo de los semanas. Los prestamistas de préstamos pequeños dicen que quieren ayudar a los consumidores a acceder a préstamos, de lo contrario no podrían hacerlo con los prestamistas tradicionales. Pero la oposición cree que se está beneficiando de miles de millones de dólares en intereses y tarifas de los consumidores de bajos ingresos.
El proyecto de ley sería una victoria para los consumidores al limitar las tasas de interés que los bancos colocan en préstamos y tarjetas de crédito. Ser pobre en los Estados Unidos puede tener un precio. Las familias de bajos ingresos no solo no califican para los productos de prohibición tradicionales debido a ingresos, historial crediticio y otros factores, sino que se ven obligadas a recurrir a servicios de préstamos alternativos. Los prestamistas abusivos conocen bien a sus consumidores y operan sus negocios en comunidades de color de bajos ingresos. En el condado de Santa Cruz, hay 3 veces más servicios de préstamos predatorios en Watsonville, en comparación con Santa Cruz.
El proyecto de ley tiene como objetivo proteger a los consumidores de los grandes bancos y prestamistas abusivos. Servicios como los préstamos de día de pago y otros productos de préstamos alternativos no tienen en cuenta el bienestar de los consumidores. Cobran altas tasas de interés, imponen condiciones de préstamo oscuras y no tienen en cuenta la capacidad del prestatario para pagar el préstamo. Limitar la tasa de interés anual protegería a los consumidores de las prácticas predatorias y les daría acceso a todos para obtener mejores productos de préstamos y tarjetas de crédito.
Artículo: Sanders, Ocasio-Cortez proponen un límite del 15% sobre el interés de la tarjeta de crédito (https://www.bloomberg.com/news/articles/2019-05-09/aoc-bernie-sanders-credit-card-interest)
By Haven Shannon, Program Associate
My first job was at an alternative lender service provider. My main responsibility was in offering short-term loans with interest rates higher than 300%. These loans were to people who came in to borrow for an emergency. This didn’t sit well with me, especially because customers quickly became frequent borrowers, due to their inability to get out of a cycle of debt. I felt that finance and customer service were my key strengths, so I moved on to work at a credit union, where I believed that I could really help people with their financial needs.
At the credit union, I found that I really enjoyed helping people understand their accounts and the best ways to utilize them. I also found that people who could benefit most from our services were often turned away or underserved. These were predominantly people of color, Black and Latino families. As a Black woman who has experienced prejudice in business encounters, it was clear to me that there was an issue with low-income families and people of color accessing quality financial services, especially in relation to credit. Disheartened at my inability to create a positive experience for clients whom I felt would benefit from the credit unions services, I left the finance world.
In 2018, I returned to school to pursue a degree in Community Studies. And I joined Santa Cruz Community Ventures (SCCV) as their Program Associate. The work that excites me most is the Familas con Más initiative at SCCV because we are working to limit predatory lending services in Watsonville and increase accessibility to traditional financial services. Going forward in my career, I want to focus my efforts on changing systems, rather than trying to navigate them, and I feel that SCCV is working hard to create equitable opportunities for all members of the community. In a sense it is a marrying of my two strengths and I’m excited to see where this new path will lead.
By Ayde Guerrero Rosas, CSA Program Associate
My parents have worked all their lives doing back- breaking work ever since I can remember. Seeing both of my parents make ends meet at a young age inspired me to ask many questions such as “why do low income families work over time and still struggle to meet basic needs?” and “what does this sort of work do to their health”. Every time I saw my dad come home from work with flushed red skin and scarred hands from the broccoli fields. I could not help but feel so much admiration and respect for the work my parents did for over 20 years. I constantly remind myself that yes, I do everything for myself, but my parents made my dreams possible with sweat, hard work, and many tears. They are the reason why I aim to learn more about health and its correlation to financial well-being.
I chose Santa Cruz Community Ventures because of their mission statement on “creating compassionate and equitable local economies that contribute to the well-being of our communities”. This statement hits close to home because wealth inequity is greatly prevalent in my hometown of Santa Maria. Financial education is not encouraged in my community due to a lack of awareness and information. I am very excited to focus my time on the launching of the Children Savings Accounts because creating healthy habits for children in Santa Cruz County will encourage healthy habits for the generation of tomorrow. I hope to gain the skills needed to be a greater leader for Santa Cruz and my community.
By Brando Sencion, Program Coordinator
According to the Silicon Valley Business Journal, in 2012 there were 3.3 million Latino-owned businesses in the United States, which grew by 46% from 2007. In contrast, white-owned businesses declined by 6% in that same time period. Latino business ownership leads the nation in growth for businesses ownership, but they still face many financial barriers. A common barrier is access to bank loans.
A 2018 study by Stanford Graduate School of Business found that Latino business owners rely on informal financing and are subject to greater financial risk due to low credit score and limited credit history. The results of these circumstances are that Latino business owners are more than likely to have limited access to traditional bank loans and are subject to high interest rates.
The barrier to access traditional banking loans may lead Latino business owners to access quick and easy funds from alternative lending services. More than often alternative lending services can impose unfair and abusive lending terms for the borrow, which are predatory loans. These types of loans tend to be short term, easy to obtain, involve fees such as pre-payment penalties, and consist of unclear terms and pricing.
Here are 3 common signs of a possible predatory loan:
Find more warning signs here.
The issue with these barriers is that it limits Latino business owners to fully grow their businesses. At times additional capital is needed to inject in a business to improve its performance. Or a business is having a tough month and needs some extra funds to make ends meet. Not having access to funds that will benefit a business is tough. These barriers can inhibit business owners from reaching their full potential.
Elisa Orona is the Executive Director at Health Improvement Partnership of Santa Cruz County. She holds a B.A. in Rhetoric from UC Berkeley and an M.S. in Public Policy and Management from Carnegie Mellon University in Pittsburgh, PA. Elisa’s Masters concentration in Geographic Information Systems served her well in Peace Corps Guatemala, where she trained fellow volunteers and their Guatemalan counterparts in the creation and analysis of digital maps. Elisa has worked across multiple sectors, including non-profit healthcare, local government, and the arts, with a focus on community empowerment and collaboration. She is honored to serve as a Santa Cruz Community Ventures Board member and supports the meaningful work the organization does for the community.
Kayla Kumar is the Development Director at Food What?! She holds a Master of Arts in Applied Economics and is passionate about solution-generating policy research that addresses wealth disparities. Kayla’s work has mainly been with youth of color, ranging from environments like music classrooms, basketball courts, juvenile halls, and farmlands. She believes marginalized communities have the expertise, vision, and initiative needed to solve the problems they face. The purpose of her work is to clear barriers erected in our current society that prevents marginalized communities from unleashing their brilliance and developing community space where all are cared for.
David Brown is a Senior Administrative Analyst at the County Administrative Office in Santa Cruz County. He is also the Administrative Co-Director of the Hub for Sustainable Living and Co-Founding member of Co-op Santa Cruz. Brown is an advocate in the community to help build more inclusive and equitable local economies. Throughout his career in Santa Cruz County, he has served on a variety of nonprofit Boards and committees including a preschool, a veterans’ cultural service center, a home-owners association, and a school site committee. Brown is proud of Santa Cruz Community Ventures economic development work and is excited to contribute his talents, resources, and connections to further the organizations work.
Dr. Chris Benner is the Dorothy E. Everett Chair in Global Information and Social Entrepreneurship, and a Professor of Environmental Studies and Sociology at the University of California, Santa Cruz. He currently directs the Everett Program for Technology and Social Change and the Santa Cruz Institute for Social Transformation. His research examines the relationships between technological change, regional development, and the structure of economic opportunity, focusing on regional labor markets and the transformation of work and employment. Benner’s goals in joining the Board would be to: 1) help provide feedback and guidance; 2) share some of his experience and work on similar issues in other parts of the state and country that might be useful for the work locally; and 3) gain a deeper knowledge of how SCCV's work develops so that he can share this exemplary work with other people and organizations. (Chris' Term to begin in January 2020)
By Brando Sencion, Program Coordinator
Senator Bernie Sanders and Representative Alexandria Ocasio-Cortez proposed a cap on interest rates for credit cards and other consumer loans at an annual rate of 15 percent, to help consumers facing growing credit card debt.
The bill would place restrictions on short-term loans, such as payday loans, which rely on significantly higher interest rates. In California, a payday loan can have an interest rate of about 460 percent for two-week loan. Small loan lenders say they want to help consumers access loans, they otherwise wouldn’t be able to with traditional lenders. But the opposition believes they are profiting on billions of dollars in interest and fees from low-income consumers.
The bill would be a win for consumers by limiting the interest rates banks place on loans and credit cards. Being poor in the United States can comes at a price. Not only do low-income families not qualify for traditional ban products due to income, credit history and other factors, but they are forced to turn to alternative lending services. Predatory lenders are well aware of their consumers and operate their businesses in low-income communities of color. In Santa Cruz County, there are 3 times more predatory lending services in Watsonville, compared to Santa Cruz.
The bill aims to protect consumers from big banks and predatory lenders. Services such as payday loans and other alternative lending products do not have the consumers well-being in mind. They charge high interest rates, impose obscure loan conditions, and lack consideration for the borrower's ability to pay back the loan. Capping the annual interest rate would protect consumers from predatory practices and give access to all for better lending and credit card products.
Article: Sanders, Ocasio-Cortez Propose 15% Cap on Credit Card Interest
By Kiana Morales, Program Associate
I grew up in a low-income single parent household. When I was younger my mom and I went through financial hardships and no one was there to help or guide us through those times. No one was there to give advice about going to college.
Which is why the work we do at Santa Cruz Community Ventures means so much. In SCCV I have found an opportunity to ensure that others don't have to go through the same hardships I went through and that they know how to utilize the resources available to them.
I’m especially excited about the Children's Savings Accounts program being launched. The program will provide a small seed investment to every newborn in Santa Cruz County. As 51% of the children born in Santa Cruz County are low income and 56% would to be first generation college students, I understand how much this seed investment can mean to their futures. Being part of this work is exciting!
I first joined SCCV during my sophomore year are part of their Youth Leadership Fellow program. In that role I was certified as a Financial Counselor and developed a financial capability program for girls in Middle school. The program focused on introducing the girls to financial concepts, career choices, and related educational requirements and financial impacts. While working with them I saw how much one person with the slightest bit of information can really impact the girls’ future choices. Seeing the students faces brighten up and seeing them smile about their future was a very motivating experience for me.
Which is why coming back to SCCV as a Program Associate was one of the easiest decisions I have made. I can’t wait to see how impactful the work SCCV is doing will be to its community.
ABOUT KIANA: Kiana is a first-generation UC Santa Cruz student. She is graduating in June 2019 with a degree in Business Management Economics with a minor in Mathematics.
by Christian Lopez, Program Associate
I am the first person in my family to graduate from high school. My mom supported and encouraged me to pursue college but lacked the knowledge and resources to guide me. It was thanks to the help of Cabrillo College staff and faculty I was able to enroll, receive partial assistance to pay for my tuition, and eventually help guide and support me. Today, I’m getting ready to graduate from Cabrillo and transfer to CSUMB to complete my bachelor’s degree in Business Administration.
Why Business Administration? Coming from a single parent household, I know the financial difficulties that can impact a family. I spent my teenage summers working in agriculture. The people I worked with came from similar backgrounds, struggles, and culture as me. Many people lack financial education, and this contributes to a family’s financial instability. My goal is to coach families in how to budget, use credit wisely and save for the future.
I first learned of SCCV as a participant of CreditBound, a program focused on building credit and building financial knowledge for young adults. Being part of Community Ventures as a Program Associate gives me the access to reach out to the community and make a potential change in their day to day life. I am excited for the journey ahead and look forward to growing as a person and learning more.
ABOUT Christian: Christian will be attending CSU Monterey Bay in Fall of 2019 to obtain his bachelor’s degree in Business Administration.
By Brando Sencion, Program Coordinator
April is Financial Capability Month and it is a time to encourage families to improve their financial futures. Financial capability is the knowledge, skills, and access to manage financial resources effectively.
Achieving financial well-being is a journey and it takes time, practice, and patience. The best way to begin that journey is by making minor changes to our financial habits. To determine those behavioral changes, we must examine our personal financial behaviors and habits. For example, we can start by making saving a priority, paying bills on time to avoid late fees, create financial goals, pay down debt, and build an emergency fund. These small steps can make a big difference in a person’s financial well-being and give them the confidence and motivation to continue down the right path.
Key steps to improve our financial futures, examine your:
However, taking these steps can be incredibly hard for many families. According to a survey by CareerBuilder, 78% of U.S. workers are living paycheck to paycheck. These financial difficulties make it harder for money to be set aside for savings, paying down debts, or making bill payments.
Families living paycheck to paycheck is the result of many external economic factors that affect our everyday lives. But creating a strategy to improve our financial situations is crucial to improve our finances. Remember financial capability is about improving your knowledge, skills, and resources to mange your financial resources effectively. Those financial resources vary from family to family, but we must use or financial capability to improve to the best of our abilities.
Building families’ financial capability is about giving them confidence of knowing where to look, what to look for, what is required to prevent economic vulnerability, and where to go for answers to questions. Below find resources to help you increase your financial capability.
By Brando Sencion
The Consumer Financial Protection Bureau (CFPB) recently decided to remove rules that protected vulnerable borrows from accruing ballooning debt that can be created by payday loans. The last set rules released in 2017 aimed to protect consumers from unfair lending practices of the payday lending industry. The original rule required that lenders determine whether a borrower could actually afford to pay back a loan before offering them one. The news rules aim to remove these protections and allow payday lenders to operate freely.
Payday lenders typically offer small loans to borrowers who promise to pay the loan back by their next paycheck. However, interest on one of these loans can have an annual percentage rate of up to 390 percent or more. In California, the maximum fee a payday lender can charge is 15 percent of the face amount of the check. But that 15 percent fee is equivalent to an annual percentage rate of 460 percent!
The other issue with payday loans is that they are structured to force people to take out additional loans when they cannot pay their previous loan. Research by CFPB estimates that 80 percent of loans are rolled over, and half of borrowers end up taking out ten or more loans in a year. Consumers fall into a cycle of debt that is difficult to escape because of the payday lending structure.
However, some states are fighting back payday loan businesses and protecting their consumers. Voters in Colorado last November approved Proposition 111, Limits on Payday Loan Charges Initiative. The proposition reduces the annual interest rate on a payday loan to yearly rate of 36 percent and eliminates all other finance charges and fees associated with payday lending. 77 percent of voters supported the initiative, to end an average APR of 129 percent on payday loans in Colorado.
As rules and policies for the payday lending industry change, it is important to educate ourselves as consumers. But as community leaders it is important to inform our communities of these changes to prevent families from falling into a cycle of debt. Mamás con Más a project with the UC Santa Cruz Blum Center and SCCV examined mothers’ experiences with financial providers, and mapped the location of alternative and traditional financial services, showing the disproportionate concentration of alternative financial services such as payday loans, check cashing, money transfer services and more, in Watsonville, CA compared to Santa Cruz, CA.
Building from Mamás con Más, the project recommended to limit alternative lenders such as payday loans in Watsonville and Santa Cruz County, due to high interest rates and fees, which push families deeper into debt. And develop policies that ban or restrict the number of alternative financial services and limit the allowable interest charged. Restricting the number of predatory lending businesses in the City of Watsonville would benefit the community. And not allowing new payday lending businesses to open until a current business closes would be beneficial.