Metro Credit Union Joins Other Boston Non-Profits to Help the Poor

A credit union in Boston, Mass., has found the best way for it to serve its community is to employ the principle that people banding together can achieve much more than a single person or institution.

Metro Credit Union ($1.9 billion in assets, 207,376 members) now serves a broad swath of the Boston area, and is the second-largest credit union in the state behind nearby Digital Federal Credit Union ($8.5 billion in assets, 780,664 members).

But its roots run deep in the city of Chelsea, Mass., where the credit union is based and was founded in 1926.

Census figures show Chelsea’s 40,227 residents in 2017 were poorer and more ethnically diverse than the 6.8 million residents of Massachusetts as a whole:

• Estimated population growth from 2010 to 2017 was 14% for Chelsea, compared with 5% statewide.
• Hispanics represent 66% of Chelsea’s population, compared with 12% statewide.
• White, non-Hispanics are 23% of the population in Chelsea and 72% statewide.
• About 18% of Chelsea’s adults 25 and older in 2016 had a bachelor’s degree or higher, compared with 41% statewide.
• The median household income was $49,614 in Chelsea and $70,954 statewide in 2016.
• The percentage of the population in poverty was 19% in Chelsea and 11% statewide.

Metro CU is a low-income credit union, which means more than half its members are low income, and has earned a earned a Juntos Avanzamos (“Together We Advance”) designation from the National Federation of Community Development Credit Unions for its service to Hispanic members.

Metro CU and other not-for-profits realized that to be effective, they must work together. They formed CONNECT in 2012 with the goal of helping people’s multiple needs through a one-stop service. It serves about 51 communities, with most clients coming from Chelsea and surrounding communities in Boston’s Northshore area.

From its long service in the Chelsea area, Metro CU employees knew that immigrants had a wide variety of interlocking needs, according to Charlene Bauer, Metro CU’s chief development officer and SVP for outreach and advocacy.

“We continue to believe, as we did seven years ago, that housing, along with financial capability, work skills and a living wage job, creates the stabilization for someone to succeed,” Bauer said.

Someone might have an immediate need for a job to avoid eviction. But the same person might also need skills to obtain a job with decent pay, and coaching to improve their job application techniques.

Or, the credit union might have to turn someone down for a car loan because their credit is poor. But what the person needs are effective strategies for paying off debts and keeping enough money in their checking account to avoid overdrafts. The person might also benefit from a loan to improve their credit score.

From the perspective of the newcomers, each need came with its own set of bureaucratic hurdles: Different agencies with different faces and different rules, and often with no one who spoke their language.

“They might need to visit one agency on how to become a citizen, another for heating assistance, another for food assistance, another for financial coaching. It gets confusing,” Bauer said.

Besides Metro CU, CONNECT’s other partners are:

• Bunker Hill Community College, which teaches about 13,000 students per semester in classes at multiple campuses in the city;
• MassHire, which provides counseling, education and technology to support job searches, and vital information and recruitment opportunities for businesses;
• Metro Housing Boston, which helps residents who are homeless or at risk of losing their home understand and navigate the public and private services available to them, including rental housing voucher assistance; and
• The Neighborhood Developers (TND), formerly Chelsea Neighborhood Developers, a community development corporation that seeks to revitalize distressed neighborhoods and foster equitable community development in Chelsea and neighboring North Shore communities.

TND, founded in 1979, serves as the hub of CONNECT, providing the staff for financial coaching and the organizational infrastructure to write grants and manage programs. CONNECT is part of TND’s mission to build financial capabilities to increase family prosperity. The group’s two other major strategies are real estate development to strengthen housing markets and expand affordable housing inventory, and community engagement to foster a resilient social fabric and civic infrastructure.

CONNECT receives grants and has its own staff, including the financial advisors. “They truly work with their clients’ interests at heart,” Bauer said.

Once a person’s immediate need is met or threat averted, they can talk further with counselors to see whether help can be found for other needs. For example, they can assess families to see if they qualify for public food assistance or help filing their income taxes. Sometimes families have failed to take the federal Earned Income Tax Credit, which can increase some families’ income by as much as 9%.

CONNECT shares a database with its partners that tracks changes in credit scores, net income and monthly wages.

During the referral process, counselors learn whether a client is banked or unbanked, and whether they’re interested in establishing a financial account. If they want an account, the referral goes to Metro CU.

“We have a team at Metro who will reach out and work with these individuals,” she said. “We encourage them to open an account and become part of the mainstream banking system in the United States.”

It has products designed for CONNECT clients, but available to other Metro CU members. For residents who need to create or repair their credit history, Metro CU offers a Credit Builder Loan. It lends $500 to $3,000, which is secured in the member’s savings account for the term of the loan, which can be up to 24 months.

The member pays a 4.1% annual percentage rate, less savings dividends. Once the loan is paid in full, the money becomes available in the member’s account. In the meantime, the regular payments on the installment loans can increase the member’s credit score.

Metro CU also offers a Visa Secure Credit Card to establish or repair credit. Its funds are guaranteed by a Metro CU savings account, and carries a 15.9% APR interest charge on purchases and $59 annual fee. Credit lines are $500 to $10,000.

In November, Metro CU introduced a no-fee, no minimum balance “Prosperity Builder Savings Account” and “Prosperity Builder Loan.” The loan is similar to the Credit Builder Loan, except members can borrow up to twice as much as their pledged savings account balance and up to $10,000. The repayment term can be as long as 36 months.

“A lot of individuals are saving toward a down payment to get into an apartment. They might not have the full down payment, so we can help them with that security deposit,” she said. “Boston rents are high. First and last months’ rent is a lot of money, especially for people who are poverty to low income.”

Most people using those Metro CU loans come via referrals from CONNECT. On the other hand, when the credit union finds existing members who are struggling, it can refer them back to CONNECT and work with them, as needed, through the CONNECT program.

“It’s a two-way street,” she said. “If we’re not able to approve a loan, we will refer them to CONNECT for coaching and counseling.”

Metro CU employees help CONNECT by providing financial training classes. In the coming year, it wants to improve those classes by making them more actionable. Instead of teaching general topics like budgeting, money management and credit counseling, it might offer classes on how to buy a car or get beyond living paycheck to paycheck.

“We don’t want people to just listen to a lecture. We want to equip people for change,” she said.