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
Is ACCION USA More Than a Microlender?
For Margarita Amador, ACCIÓN USA served as more than just a lender; “ACCIÓN USA has helped me tremendously because I received a lot of advice not only on how to continue with my business, but on how to improve and manage my personal credit.”
Knowledge is power. What a simple but empowering phrase. It resonates with me on so many levels: as a recent college graduate, as a woman, and as a voter. So, when the latest FDIC white paper, Financial Education and the Future, outlined the startling state of financial education in the United States, it prompted me to consider ACCION USA’s role as not only a microlender but also as an educator.
The FDIC paper reported that an estimated 10-20 million individuals are unbanked – that is, they have no relationship with a bank. Moreover, this trend appears most acutely among new immigrants and members of minority communities. A staggering 35% of our county’s Latino population is unbanked, due equally in part to cultural differences, language barriers, and institutional distrust. This unbanked trend continues to lead these individuals to expensive alternative banking sources, such as predatory payday lenders.
Some advocate regulating these alternative sources, but rate caps only go so far. And more importantly, they don’t directly target the financial illiteracy that frequently lies at the root of this problem.
ACCION USA targets this root. We’re in the asset-building business, and education is an asset that adds value for generations to come. Our interactive workshops show individuals that saving is important – if only $5 a month. Our personalized technical assistance explains why good credit is crucial in this country, and why debt must be managed and not ignored. Our one-to-one business counseling demonstrates that planning and cash flow and recordkeeping are essential for business survival.
For some, these things might be common sense. But consider the perspective of a recent immigrant or of someone whose parents immediately cashed each paycheck just to put dinner on the table. Just as your home environment will influence your knowledge of sports, music, or any other activity, it can also predict your future money management skills and those of your children and of your children’s children.
Instead of allowing financial illiteracy to perpetuate, ACCION USA takes the initiative to educate and instill in individuals the education and tools they need to succeed in this country.
And by doing so, we’re seeing every day that knowledge really is power.
Delicious Caribbean Dishes, As Seen Online!
On Sunday an authentic Caribbean eatery in Manhattan serves up Bintou’s Famous Pepper Soup and on Monday, try Sauce Arachide (Peanut Butter Stew w/ Beef), each for just ten dollars. Unless you lived near or strolled by ‘New Ivoire Restaurante’, you probably wouldn’t have ever visited the delicious spot… until now! With the help of a volunteer and Yola.com, restaurant owner and ACCION USA client Cheick Cisse has a website that he hopes will bring in some extra business.
ACCION USA has a diverse base of clients ranging from small local restaurants like Cheik’s to small, tech saavy media companies like Maureen’s, Moped Productions. But for many microloan clients at ACCION USA, a business website has often seemed too advanced, too expensive, or even unnecessary. Busy restaurant owners like Cheick simply don’t have time or the extra money to invest in web development.
ACCION USA struck an immediate partnership with Yola when we learned about the free web building tools that they were offering. And we began to think of simple and creative ways to introduce this service to our clients.
Lauren, an ACCION USA volunteer met with Cheick at his restaurant and was able to put together a simple and useful website. “I’m delighted I’ve been able to spend my free time volunteering at ACCION USA. It’s very rewarding to help clients at an organization that works so hard to empower people financially,” she says of the experience.
Now Cheick just needs a lesson on optimizing the searchability of his website on search engines like Google. Have SEO experience and interested in volunteering? Contact Erica Dorn edorn@accionusa.org, but first check out ‘ New Ivoire Restaurant‘ for a true taste of the Caribbean.
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 Microfinance Council Did it Again!
The Microfinance Council of ACCION USA did it again!. With commitment and enthusiasm over 60 supporters of gathered at the Axelle Art gallery in New York City on Wednesday night to support out work. ACCION USA is incredibly lucky to receive support from the hearts and minds of the members of the Microfinance Council—they are truly some of our strongest supporters. Over 200 volunteer members strong, they organize events and fundraisers, conduct consulting projects, and raise general awareness about our products and services.
Last nights event for ACCION USA was a ton of fun and was truly heart warming. Want to get involved? Consider supporting a local business by hosting an event for ACCION USA yourself. Get inspired to gather your friends and community members at an event to educate them about the cause of domestic microfinance. ACCION USA and microentrepreneurs need your support more than ever! Find information here to plan your event or contact our volunteer fund raising guru Jessica at jessica.royston@gmail.com.
Check out the video from the fundraiser last night. A special thanks to Live Footage for their spectacular musical performance, a combination of electric cello and drums and keyboard with an electronic Echoplex looping.
Tags: accion usa, events, fundraising, Microfinance Council
Is ACCION USA in the Era of Web 3.0?
Staff member Erika Eurkus assists an ACCION USA client in building a website for free using Yola.com
I first heard the term Web 3.0 last week at the SOCAP conference in San Francisco. To be honest, I am still trying to understand Web 2.0, but leave it to the technologically savvy San Franciscans to bring me up to speed on online social innovations.
If you’ve joined ACCION USA’s Facebook Page or if you have lent money via our Kiva.org lending team, then you have entered the age of Web 2.0. Web 3.0 is stepping from that online social space back into the offline community. This definition is still up for debate, but using the context of online-to-offline social good I will make an attempt to draw ACCION USA’s path to Web 3.0.
ACCION USA has been working offline in communities throughout the U.S. since 1991. I recently observed one of our New York-based loan consultants as she worked late every day for an entire week, doing everything she could to help her client get the capital he needed for his business. Next, by directing her client to Yola.com to build a website for free, she helped to bring her offline work with this client into the online space.
ACCION USA has recently partnered with Yola.com, which deserves a big round of applause for the great service that it is providing to our clients. The partnership offers clients that create websites through Yola.com the chance to be featured on the Yola.com website — a great marketing opportunity! ACCION USA’s longtime goal of helping our clients create a web presence is now becoming a reality. Yola.com provides a simple drag-and-drop application that makes it easy for anyone to build a website. And in our New York office, Yola.com has sponsored a workstation where volunteers can provide one-on-one assistance to help a microentrepreneur build a website for free! Could this be Web 3.0?
So as you engage in Web 2.0 by reading this blog and commenting on it, consider volunteering with ACCION USA. Empower a business owner by helping them create a website through Yola.com. You could even help them start their own blog! This is my take on Web 3.0 and ACCION USA’s role in it. What are some ways that you’re engaging in Web 3.0?
Tags: accion usa, us microfinance, web 3.0, yola.com
Takin’ it to the Web: Online Microbusinesses Thrive in Recession
Dan and his self-designed greeting cards
Dan is certainly no stranger to the internet’s powerful reach—his social media savvy shows, even though he claims to be a novice. His greeting card company, iZon, was started at his dining room table, and has expanded beyond his wildest expectations. Now he is planning to bring his business into the internet age with a new website and marketing campaign.
Internet-based businesses in ACCION USA’s portfolio have been performing extremely well lately, largely because they have low overhead. Freed from the obligation of rent, they have fewer financial burdens to manage in the event that sales take a turn for the worse due to the recession. Joshua, for example, runs his vintage clothing business solely on the internet. Instead of investing capital in rent for a storefront, he sells his handpicked items online.
The economy may or may not be on the path to recovery, but it’s clear that jobs will keep dropping for a while longer. This means that more and more budding entrepreneurs are seeing the recession as an opportunity to go into business for themselves. While ACCION USA provides vital financial services to this population of entrepreneurs, the internet provides a low-cost marketplace for their ideas.
Though online businesses may not be the first thought that comes to mind when thinking of the typical microfinance borrower, I know I’m definitely curious to see if the internet becomes a more common marketplace for microbusinesses over the next few years. Business presence on the web may also become a metric for social impact as we work with our entrepreneurs to develop cost-saving solutions to doing business.
Top Four Reasons Why I’m Going To SOCAP 09
I can think of over a hundred reasons to attend the SOCAP conference in San Francisco September 1-3, 2009.
What is SOCAP 09?
SOCAP (Social Capital Markets) “brings together a unique mix of the world’s top social innovators, investors, donors, entrepreneurs, and thought-leaders, today’s leading catalysts of change from across the globe. [to] celebrate the renewed will and determination of these pioneers investing for social impact.”
The top four reasons why I’m attending…
- YOLA.com ACCION USA is partnering with Yola.com, a company that provides free web building and hosting tools. We are excited to bring technology and marketing tools to the microentrepreneurs that we serve. SOCAP is a chance to discuss this exciting new partnership.
- KIVA.org ACCION USA is in its third month of its pioneering partnership with Kiva.org, which speaks to the innovation that ACCION USA is bringing to the domestic microfinance industry. As the former Kiva fellow and current Kiva coordinator at ACCION USA, I am excited to hear Premal Shah speak about the future of social innovation on the web and Chelsa Bocci discuss Kiva’s community outreach initiatives.
- Sonal Shah from the White House’s office on Social Innovation is the keynote speaker and will be addressing the government’s new socially minded strategy to “effectively streamline government towards investing in what works.” This one speaks for itself.
- Day 3 Keynote: “An aspirational look at the future of our economy and society at large. Focusing on lessons learned outside of western society and the holistic nature of blended value ventures.” Bringing blended values to socially minded business sounds like a song to me and is a perspective that deserves considerable discussion.
I am looking forward to the opportunity to engage and learn from the list of over 100 speakers on panel discussions ranging from “Social Media That Moves People to Action” to “Alternative Financial Services for the Unbanked.” Check out the complete list. I look forward to my return to NYC after the conference as ACCION USA continues to expand and grow, generating innovative ideas and continuing to provide fresh products and services to our clients.
Tags: accion usa, chelsa bocci, erica dorn, kiva, premal shah, SOCAP 09