By the end of 2007, almost 55% of Kalamazoo residents lived in households with total incomes of less than $35,000. The 2010 census showed a significant increase in this figure. An even higher percentage of families with children live in poverty – almost 70 percent of Kalamazoo Public School students qualify for school lunch programs. In these challenging times, shortfalls in family budgets can mak
e it impossible to pay the rent, the utility bill, medical bills, or car payments. For far too many families, it seems like the only readily available sources of funds to address these types of crises are predatory institutions such as payday lenders, quick cash services, which can be found in ever increasing numbers, particularly in our core neighborhoods. While purporting to provide a needed service to those in need, the reality all too often is that these institutions lure their customers into a never-ending spiral of debt and despair. State law allows interest rates and fees that can be as high as 400 percent. In addition, fees for check cashing and money orders can add up to a substantial expense for individuals struggling in poverty. Moreover, the inability to acquire credit makes many low-income residents vulnerable to the high costs of rent-to-own outlets. We serve those with a prior history or poor credit, lack of financial understanding, language barrier (Spanish language services available), lack of legal identification documents, and an ongoing suspicion of banking institutions. The limited financial literacy of some Kalamazoo residents, like those in other inner-city neighborhoods throughout the country, discourages them from attempting to open accounts at traditional financial institutions. They are left vulnerable to the apparent “quick fixes” that payday lenders offer, and often are not aware of alternatives to paying fees for basic financial services. Community Promise addresses these issues by offering its members fair and affordable loans and other basic financial services at little or no charge. By working with its many community partners – schools, churches, businesses, non-profits, as well as mainstream banks and credit unions – it serves families who live from paycheck to paycheck, or who have no steady source of income, and provides them with products and services that will allow them to regain control of their finances and begin to repair or earn credit. Community Promise provides financial education to member families who have no credit history to establish good credit records, and it will help members with troubled credit histories to learn how to manage their money so that they can establish solid credit ratings.
