Originally published on CUInsight.com
A few days ago, a friend asked me a favor. Since I’m a “financial expert” (Um, really? Oh boy.), she asked me to speak with her friend about credit card options. The other person had a challenging credit history with little financial knowledge at all.
A Facebook Messenger request later, and the chat began. My goal was probably familiar to those of you working with members:
- Identify her challenges
- Focus on her goals
- Educate on her options
- Develop a knowledge base she could build upon
- Provide tangible actions she could take right now
Going in, she was open to learning, guidance, and had a good grasp of what she didn’t know. Maybe not common, but refreshing.
I should also make clear: This entire conversation occurred over text on my phone only. Consider that as we look to digital solutions for all member engagements.
Since the conversation was for her, why not format the article about it the same way?
Her story is one you will recognize. She made some poor financial decisions in the past (through lack of understanding, financial need, or immaturity). As a result, she had a poor credit score. Even worse, she saw the score as a scarlet letter.
“No shame. No judgement,” was my reassurance. You’re making great decisions now. That’s what matters.
On top of that, a common challenge across society: Family history of financial mismanagement and stress. Bravely, she claimed, “I want to break the cycle and not have to stress about any of [it].”
Beyond the poor credit score, she felt she didn’t know much about financial matters. Not quite true, since she understood the importance of carrying no credit card balance, finding a rewards card, and avoiding fees.
The biggest challenge was her feelings towards what she felt she didn’t know.
First and foremost, her goal was to rebuild her credit. Seeing the current score made her upset. Beyond that, it limits opportunities that may emerge.
Accomplishing the first tied into the second: Get a good credit card. In my mind, there was no question her best bet was with a credit union. Lower rates (if necessary) and more accepting approvals drove the decision. Given where she lives, I had a good idea of where I’d suggest.
You know that just signing up a member with a particular service may not be the best approach. If they don’t understand why it is their best choice, loyalty or trust won’t develop. So it was time to evaluate and discuss options.
The chosen credit union has a few different credit cards, and I gave her the opportunity to review the first two. I honestly don’t know which she would get approved to carry. The important points:
- No annual fee (unless you get insane rewards, this is totally unnecessary)
- Low interest rate (ongoing, not just some promo period)
- Low minimum credit limit (better chance to get approved)
- Possibility for rewards (incentive to use the card, helping credit score)
Here’s where I got into “Credit Union Geek” mode. After wondering how to apply, it was time to explain what a credit union really is. Focusing on the member-owned and not-for-profit differences from banks, her response:
“I always wondered what the true difference was. That’s awesome. That’s amazing. Makes sense why people have their accounts there versus the big [banks].”
I still believe people make decisions based on what the institution can offer them; a clean and functional app, competitive financial products, easy support if needed. However, the “credit union difference” can be the “cherry on top” for marketing efforts.
So now she knows what credit unions are, a basic history of the movement, and what that means for her. She’s sold. Now, as Tony Robbins would say, “take immediate action.”
It’s easy to just put stuff off for another time. And then the impetus goes away. We get lazy. Other distractions emerge. To make serious changes in her financial life, she has to do at least one thing right now.
- Join Suncoast Credit Union. Yes, my company works with them. It’s a great relationship. Their members also seem to love them. So why not refer?
- Use our financial literacy platform. My company offers Learn4Saving freely to financial institutions for their members. If it can help her, perfect!
- Connect with Suncoast’s dedicated financial guidance counselors. They have a team trained to help with financial challenges or just answer questions.
- Use my “inside connections” and speak to a certain team to get started. Hey, feels special having a dedicated extension to dial when you’re just starting out!
- Begin “paying yourself first”. That new savings account is a good place to start.
- Build a basic budget. It can be simple, just something that helps you identify where money flows once it’s in your hands. Especially now, too much is unpredictable to bother getting really specific, and what value does that even add?
- Deal with my many puns. Somehow, this was well-received. I try not to take “credit” for my skills. And I’ll be “saving” plenty more for another article. You could even say I’m “budgeting” them for later.
I’d say step 7 is definitely the hardest.
What You Don’t Know
What began as a favor turned into a learning experience for me as well. I really hope it made a difference for my new acquaintance. Too many people feel stress and shame when it comes to discussing financial matters.
That’s a stigma we need to address.
It’s easy to look at someone with a low credit score and think, “well, they just don’t save or spend responsibly.” Thankfully, I know so many credit union people who understand and go deeper.
Because if you only help the people in perfect situations, are you really helping?