CARD Act Gives Consumers a Break
I want you to think back to the very first time you opened your mail to find that golden ticket: a pre-approved credit card offer. Was it been everything you hoped it would be? Or did you fall for some of the oldest tricks in the book…
Were you the college freshman who now realizes that the free pizza, Frisbee, and bottle opener at the credit card company’s fall expo booth might have actually cost you more than you thought (cough, 70” flat screen TV with 24% APR, cough)? Did you find out the hard way that “due on March 17th” actually meant “due by 9:00am on March 17th, so it actually needs to be here on March 16th… which conveniently falls on a Sunday, so let’s have it here by close of business on Friday the 14th”? Or maybe it just took a little too long to realize that consistent $30 monthly payments on your $800 couch would make your payment plan longer than your sofa’s life.
Every year, a new crop of credit card users finds themselves in these types of predicaments. Fortunately, the new Credit Card Responsibility and Disclosure (CARD) Act now makes each of these situations much less likely to occur.
The legislation is complex, but the highlights include limits on interest rate hikes, broader definitions of “on time” payments, new rules for pre-existing balances, and requirements on disclosures and extending credit to young adults. No more pre-5:00pm deadlines. No more interest rate hikes without 45 days of notice. No more credit card reps hiding in wooden horses allowed within 1,000 feet of college campuses.
The CARD Act’s transparency requirements may be particularly beneficial to small business owners in offering them an opportunity to strengthen their personal credit histories, further allowing them the opportunity to finance new employees, purchase inventory, or open a storefront. As an organization, ACCION USA’s goal is not only to provide small business owners with a transparent financing alternative to credit cards but also to teach them the necessity of managing credit card debt. The underlying message is simple: spending and paying responsibly keeps money in your business. And money in small businesses means economic recovery for our country.
Let’s hope that the CARD Act’s transparency requirements will mean the same thing.
Tags: accion usa, CARD Act, credit card, Financial Education, interest rates, legislation, microfinance, money management, new law, small business
The Incredible, Shrinking Tax Refund!
ACCION USA provides taxpayers with the financial education and resources they need to make smart, informed decisions about RALs.
And so it begins. Tax season. The time of year when tax prep software commercials sandwich prime time TV shows and your friends in the tax prep industry sleep on office couches. For many like myself, it’s another opportunity to procrastinate for four months and then spend my entire refund on priority mail.
Unfortunately, this time of year is also notorious for coercion and scheming, and the latest trend is in refund anticipation loans (RALs). A tax preparer may advertise these loans as “instant loans” or “instant refunds” – in reality, the only instant thing about them is the speed with which your real refund will shrink.
Here’s how it works: your tax preparer offers you a RAL; you accept the offer and sign a document, which is essentially a loan agreement authorizing the preparer to use your refund as a guarantee, with interest rates as high as 50-500% a year; the loan is (instantly!) approved; you walk away with fast cash but actually receive a significantly smaller refund; and the tax preparer makes one hefty profit.
Certainly, the tax prep industry provides a highly-demanded service for many, many people. But according to the Woodstock Institute, 8.67 million taxpayers received RALs in 2007. A RAL may very well have been an appropriate solution for some of these individuals, but I will venture to guess that they comprise only a small portion of that 8.67 million. What about the millions who are essentially handing over their hard-earned money? I believe the answer lies in education and empowerment.
ACCION USA’s financial education team is on top of this. We have already distributed an article addressing RALs, and we are featuring RALs in our online tip of the month. In addition to educating clients on the implications of refund anticipation loans, we also provide them with valuable resources, including smart alternatives to RALs, lists of free tax preparation locations (including our Miami, FL office), and helpful websites. These resources not only have the power to produce more informed taxpayers; but they also have the potential to mold a new generation of educated, responsible, and empowered consumers.
This type of generational change may not be instant – but in terms of the return, the investment is surely worth the wait.
Tags: accion, accion usa, anticipation, education, eitc, financial, Financial Education, literacy, loan, microfinance, prep, preparation, RAL, refund, tax, tax season
Microfinance, But Only For Some?
I felt inspired yesterday by reading a blog about university students trying to make microfinance accessible to refugees in their community. Professor Jude Fernando’s microfinance students are applying principles learned in the classroom to serve the need that is being expressed in their community. As Professor Fernando said in the article
Worcester is a microcosm of the world, We don’t have to fly 1,000 miles away looking for the Third World. There is one right across the street.
Refugees like Oulimate have proven to be successful small business owners in the United States
I nodded as I thought, yes, indeed. Microfinance is a great tool for displaced refugees trying to build a new life in the United States. In fact it is said that the majority of microentrepreneurs in the U.S. are first and second generation immigrants.
You can imagine that a refugee from Burma, who doesn’t speak English, will find most success creating and selling their native handicrafts, since it’s unlikely that big-box employers like Walmart would hire them. As I read Priyanka Dayal’s article, I was mentally praising the students at Clark University for the important cause they are supporting.
Then I scrolled down to read my favorite part of web based journalism, the comments—here, both encouraging and discouraging. Some disagreed entirely with the work of the professor and his students at Clark, arguing that refugees are undeserving of microcredit because there are other “local” business owners who ought to be first in line. Or the comment that basically refugees don’t know the rules here, so they should be able to play the game, so to speak.
Indeed there are barriers to entry in the United States that are much greater than in developing countries, that why most microfinance institution offer financial education and technical assistance resources to assist entrepreneurs in meeting these requirements. It’s in our interest to see that micro entrepreneurs formalize there businesses and learn the rules. And most importantly we believe that all individuals no matter their country of origin, or road to entreprenuership are equally deserving of credit– capital that is needed to support a healthy family and a healthy community.
Read the excellent article written by Priyanka Dayal, and chime into the comments. I’ll add this one…
But far be it for me to point out the obvious. Okay fine… I will! It is integration of all aspects of our society that creates prosperity. Giving refugees a pragmatic tool like microcredit to empower their success, is a success that we all share. After all there are many who consider microcredit a human right.
Aftershocks for Miami’s Little Haiti for Many Months to Come
ACCION USA's Little Haiti, Miami-based clients are among those mobilizing to help Haiti recover.
From loan consultant Joann Milord in Miami.
It is more than one week later and the images on the TV have not changed. Haiti is still in chaos and people continue to die daily. I turn on CNN every chance I get to watch the latest news, the most recent rescue, or the updated death toll. I’ve never experienced anything close to such a traumatic event and cannot even imagine what the people of Haiti are experiencing. Speak to anyone in Haiti now and they tell you what you see on TV is not even close to the reality of the amount of suffering.
Every Haitian has been affected by this earthquake, no matter where you live in the world. I see it here up close in Miami’s Little Haiti—home to the largest Haitian immigrant community in the nation. Our families have either lost members, friends, colleagues, businesses or homes. We are all victims and heroes as we scatter to collect water, food, clothing and medical supplies. Those that can, add names of the missing to list on the Internet or send messages on Facebook. What about those who can’t or don’t know how? How are they able to find out about their families without access to electronic communication? They turn to fellow Haitians for assistance.
One thing is evident in Miami, Haitian organizations, government officials, and individuals are working hard to provide support to their homeland. Whether it is done collaboratively or independently, it is done with great momentum, love and dedication. Everyone has the same goal of progress for Haiti. After these immediate needs are met, then the process of rebuilding livelihoods is the next step. Hopefully this passion will continue and drive efforts to build a better Haiti in the near future.
Reverse Remittances and U.S. Microfinance
When I interview ACCION USA clients to gather information for their Kiva profiles, they nearly always mention having a family member in another country relying on them to send small portions of their income, or “remittances,” back home. That’s why this week’s New York Times article on “reverse remittances” struck a chord with me. The article explains how families abroad are now having to send monetary support to their family members in the U.S. While immigrants originally came here to search for better economic opportunities, nowadays they are finding the opposite.
Is returning to their home countries an option? For some, it is – but it’s not that easy. It may take immense effort and sacrifice to scrape together the thousands of dollars needed to move to a new country. Many immigrants who come to the U.S. give up their homes and possessions in their native country and trade them in for an entirely new life. They may have married and had children who would be disrupted by a move to another country they barely know.
Immigrants are a vital part of our economy – in New York, for example, over the last decade, immigrant-dominated neighborhoods such as Washington Heights and Sunset Park have seen increases in new firms at rates close to 50%, and job growth of 30% (compared to overall city job growth of 7%).1 Entrepreneurship is an engine of employment, as small businesses provide self-employment for the business owner and are responsible for 75% of net new job creation in the U.S.2
Now, more than ever, small business ownership is a way for immigrants to take control of their economic future and take the initiative to provide employment opportunities for themselves and others in their communities. As unemployment grows in the U.S., ACCION USA’s mission to support these entrepreneurs and, by extension, the economic development of their communities, gains more urgency.
1A World of Opportunity, Center for an Urban Future. February 2007.
2MicroTest Outcomes 2008. The Aspen Institute – FIELD Program
Global Entrepreneurship Week: Linking Ideas with Young, Enterprising Minds
November 16-22, 2009, Global Entrepreneurship Week 2009, will introduce millions of young people in more than 75 countries around the world to entrepreneurship. More than 3 million participants in panels, forums and innovation tournaments will be encouraged to explore innovative thinking, linking ideas with enterprising minds!
The timing for the second Global Entrepreneurship Week, founded last year by the Ewing Marion Kauffman Foundation and Make Your Mark, couldn’t be better.
Underlying this week is what the Kauffman Foundation has termed a ‘coming entrepreneurship boom’. An upbeat generation of young entrepreneurs ages 20-34 is taking a lead in small business innovation and development. With an overall more positive outlook on the economy (see Crain’s New York Business.com Article), young entrepreneurs are leading the way with innovative business ideas and strong plans for execution.
Perhaps it’s that young people see entrepreneurship as a viable and exciting alternative to today’s slow job market. Perhaps the success of young companies like Google and Facebook is alluring. Perhaps the reasons for this ‘coming entrepreneurship boom’ are many! ACCION USA has certainly seen a surge in young entrepreneurship. Check out Joshua’s story. Joshua, an ACCION USA client on Kiva runs a web-based used/new clothing company in Michigan and received a $1000 loan from ACCION USA to purchase inventory.
This year’s Global Entrepreneurship Week 2009 involved participants from all walks of life. You too can get involved today to wrap up Global Entrepreneurship Week by visiting www.unleashingideas.org. Don’t just watch this innovative economy unfold – jump right in!
The Kiva Transparency Debate: Here’s What’s Crystal Clear
In the microfinance world there has been a lot of discussion about Kiva in the past month. Much of the talk has centered on Kiva’s description of the way that its users’ dollars are channeled to microentrepreneurs. Clearly there is room for debate over how to best structure (and then explain) what is admittedly a complex system.
Lost in the debate was Kiva’s announcement last week that it had topped $100 million raised, just four years after the organization’s founding. With a stunning number like this, it seems safe to say that no other microfinance organization has so effectively mobilized large amounts of capital in very small increments.
ACCION USA witnessed the “Kiva effect” firsthand, shortly after posting our first clients to Kiva.org this summer. Before long, Good Morning America, CNN, and NPR were all running stories about microfinance in the United States. We were flooded not just by calls from entrepreneurs seeking a loan, but also overwhelmed by the support of individuals who wanted to help.
Kiva’s work worldwide makes two facts crystal clear: the Internet offers tremendous potential to connect individuals to the transformative power of microfinance and that Kiva lenders have an unwavering commitment to helping others succeed. This is true whether they are supporting an entrepreneur a world away or one right in their backyard. As an organization working to deliver capital to those who desperately need it, we at ACCION USA are thrilled to welcome to our organization these new stakeholders (some of whose stake is just $25). We are so glad they joined us, and hope that they will continue to learn about our work and the clients we exist to serve.
Brilliant, Dedicated, Committed…
“Never doubt that a small group of thoughtful, committed citizens can change the world, indeed, it’s the only thing that has.” –Margaret Mead
I’ve always loved this quote as a reminder of staying focused on the small meaningful accomplishments that occur everyday. I taped it to my cubicle a few weeks ago in tribute to the dedicated group of volunteers at ACCION USA.
However, since our volunteer efforts have been growing, it’s time to reassess what Mrs. Meade meant by “small group of thoughtful, committed” … Among other characteristics, our group of volunteers are both thoughtful and committed, but small? We have a staff of 58 and a volunteer brigade that is exceeding 200!
Volunteers at ACCION USA participate in a range of projects and their work is making a huge impact. New projects are popping up all over the organization and there are bright and ambitious minds to join the cause. Just yesterday a new project was created that would allow volunteers to help restore a microentreprenuers storefront in New York City. Volunteers would have the opportunity to give back to the community by helping a struggling business beautify to increase sales. Other volunteer projects such as an internship in Financial Education and Social Media are helping to bring awareness of ACCION USA’s product to communities throughout the United States.
Each corner of this organization is being bestowed with the brilliance and dedication that volunteers have to offer. Most importantly, the commitment of these volunteers is making a real difference on behalf of the microentrepreneurs and communities that we serve. So if you ask me who is changing the world, I would have to agree with Mrs. Meade and say that groups like the volunteers at ACCION USA— they are dedicated to the cause of domestic microfinance and together create lasting impact.
Check back for Volunteer opportunities as they arise.
Student MFI Leaders Meet to Discuss the Future
Student led-discussions generated fresh microfinance ideas at “Scale and Sustainability: Increasing the Impact of Student-Led Microenterprise Organizations”
The Aspen Institute’s FIELD, the Intersect Fund and Elmseed Enterprise Fund co-hosted an event for emerging student-run MFI’s this past weekend at Rutgers University with the headline: “Scale and Sustainability: Increasing the Impact of Student-Led Microenterprise Organizations.” Nine of these organization (students from Brown, Bentley, Cornell, Rutgers, Yale, Lehigh, Duke and grads from UCLA and MIT) got together to exchange best practices, talk about ways to engage with the field, and figure out the best way to collaborate and leverage their diverse strengths.
As a microfinance practitioner, it was so refreshing to hear their new ideas and visions for their local organizations. I feel strongly that members of the seasoned microfinance field need to find ways to engage with these students, whether through internships, mentorships, or partnerships. I walked away so impressed and realized that this really is our future.
You can read more about the event on the Intersect Fund’s blog.
Are you involved in a student microfinace group? Leave a comment telling us about your organization and your experience working in the field.
Live, Love, Lend
This guest post comes from Boston staff member Melissa Roberts…
Thursday night, Kiva held its very first lenders party in Boston with the spectacular tag-line “Live. Love. Lend.” ACCION USA, is one of only two Kiva partner 
organizations in the United States, and we dared not miss the event. Our Boston-based team bundled up and trekked through the unusually bitter weather to support micro-entrepreneurs.
Lenders, supporters, and curious minds gathered at the Mexican-Irish fusion pub Jose McIntyre’s. While the DJ spun hot beats, the true star of the night was ACCION USA borrower Doracy, owner of Dore’s Boutique in Fall River, MA, who had received her loan through our Kiva loan program. Before coming to ACCION USA, Doracy had tried to find a small loan through traditional venues, but was unable to get the small boost of capital she needed to stock her store’s shelves for the holiday season.
A splendid time was had, and much to our delight Jose McIntyre’s was not only serving Sam Adams Boston Brick Red, sales of which benefit ACCION USA’s Sam Adams Brewing the American Dream Loan Fund, but promoting it with coasters strewn all over the bar!
The simplicity of the event got me thinking: a group of people, all passionate about a cause can get together and support microfinance by doing something commonplace. We all gather with friends at bars and purchase beer to enjoy. Now, organizations like Kiva and Sam Adams are putting a socially conscious spin on these activities by linking them to microfinance!
I know that I, for one, will be more conscious about supporting small businesses as I go about my daily life, because being part of something bigger is thrilling.
I’ll sign out with a word to the wise: Live. Love. LEND! (And drink Sam Adams responsibly!)
Tags: jose mcintyres, kiva, live love lend, Sam Adams