KANSAS CITY, Kan. - One of Maria Carrillo’s clients said thieves jumped him on payday because they knew he’d leave the check-cashing business with his pockets full of bills.
How was he to know he could open a bank account in this country, Carrillo said, if he was still struggling to read in Spanish?
Carrillo, a financial consultant whose office windows look onto a ward of this city where taquerias have replaced steel plants, knew he was just the kind of client banks want.
As the housing market slows, lenders have come to see the country’s new Hispanic immigrants as a market with a great upside. By 2010, the disposable income of Hispanics will exceed $1.08 trillion, or 9.2 percent of total purchasing power nationwide, according to the Selig Center for Economic Growth at the University of Georgia.
Even as Congress debates their legal status, banks are tailoring their products to meet the country’s newest residents where they work and live, installing ATMs in meatpacking plants and creating special mortgage packages that don’t require the traditional documentation.
‘‘If I buy a home here, I want to be 100 percent sure of what I’m buying,’’ said Victor Cruz, a native of Toluca, Mexico, as he met with Carrillo at the Kansas City-based nonprofit El Centro, an outreach group that helps immigrants with everything from English classes to money matters. ‘‘Otherwise, you end up feeling like a rabbit, surrounded by foxes lying in wait.’’
After experiencing decades of financial crises and currency devaluations in Latin America, first-generation immigrants often prefer to carry cash than to deposit their money in the bank. Reports of predatory lending and payday muggings in the Hispanic community have prompted officials at Federal Reserve Banks across the country to encourage lenders to develop alternative means to bring Latino families into the banking system.
One-third of U.S.-born Hispanic residents and over half of all Mexican immigrants lack bank accounts, according to 2000 figures from the U.S. Census Bureau. But there’s no single formula that meets the diverse needs of the Latino market.
‘‘The No. 1 mistake that banks make is to translate their brochures. They think having their information on a pamphlet in Spanish will produce magical numbers for them,’’ said Laura Castro de Cortes, a consultant at Latino Banking Solutions, based in Omaha, Neb. ‘‘For secondgeneration Latinos, we’re gonna react like the rest of the market and say ‘OK, who has the best price?’ That’s totally different from marketing for the new arrivals, whose biggest problem is that they walk around with rolls of cash.’’
Many undocumented Latino immigrants shy away from mainstream lenders for fear that giving over personal identification could result in deportation. The USA Patriot Act requires banks to ask customers opening an account for their name, date of birth, address and a taxpayer identification number.
El Centro is one of few groups to offer that kind of detailed financial education in Spanish in the Midwest. But in recent years, the number of products available to the undocumented has mushroomed.
As baby boomers age and their savings leave the financial system, banks see the Latino population’s relative youth as a plus.
By 2010, a study by the Joint Center for Housing Studies of Harvard University shows Latinos will account for nearly one-third of the homebuying pool.
But to make that happen, more families will need to learn how to handle real estate agents, mortgage brokers and building inspectors in classes like those held at El Centro. Carrillo said of the 850 families she met with last year, only 100 had the financial training necessary to buy a home.
For some clients of Carrillo’s, opening a stored-value card like Central Bank of Kansas City’s ‘‘tarjeta segura’’ is a good first step.
Dual-account cards are another popular option for clients who want to send remittances home — many banks now offer savings accounts that feature a sub-account in Mexico, accessible via a Visa or MasterCard-branded debit card.
In Garden City, Kan., where the Hispanic population more than doubled in the last 20 years thanks to the booming meatpacking industry, several companies offer employees payroll cards. It’s another alternative to a bank account, and lets employers deposit workers’ earnings directly to an account in the company’s bank.
‘‘You’ve got to meet people where they are,’’ said Lydia Contreras, marketing officer for Central Bank of Kansas City.
Agustina Chavez said Central Bank’s bilingual tellers reassured her that her $100 wouldn’t disappear from her bank account unless she withdrew funds. But she wasn’t entirely convinced.
‘‘I put my son’s checks in there and I use it to get money orders to pay bills,’’ said Chavez. ‘‘I feel like they have hidden fees. It’s hard to save anything.’’
Hispanic financial market facts
Where do they put the money? One-third of U.S.-born Hispanic residents and over half of all Mexican immigrants lack bank accounts.
The wealth gap: The average net worth of Hispanic households nationwide is $8,000, while for white households it is almost $89,000.
The demographic boom: By 2009, the disposable income of Hispanics will grow to $1 trillion, or 9 percent of total purchasing power nationwide.
The housing market: By 2010, Latinos will account for nearly one-third of the home-buying pool. Clients will finance $44 billion of mortgages through loans that accept a government-issued alternative to the Social Security number. Tailored products for Hispanic market
• Stored-value cards: A ‘‘starter’’ product that’s not a bank account, but gets clients ready to open one. Stored-value card holders can deposit money directly onto the card and withdraw their funds at any ATM, or use them like a debit card to make purchases.
• Payroll cards: A replacement for paper checks, employers use payroll cards to load workers’ earnings into an account tied to the company’s bank. Employees can access their pay directly at an ATM. Pizza Hut and McDonald’s currently issue these.
• Dual-account cards: Savings accounts that allow a second account holder in another country to take out money using a Visa or MasterCard-branded debit card. These compete with money-wiring outlets such as Western Union, and allow immigrants to both store cash and send money home. Some are run by mainstream lenders, others draw on a network of Mexican credit unions.
• Alternative credit reports: Many mainstream lenders now allow clients to establish a credit history using utility bills or bank statements to prove on-time rent payments.
• ITIN loans: The Internal Revenue Service issues taxpayers an alternative to the Social Security number called the Individual Taxpayer Identification Number. Many private mortgage lenders qualify clients for loans using the ITIN as identification. Taxpayers in Illinois who lack a credit history can now qualify for 30-year fixed rate mortgage loans administered by a state agency by using this alternative taxpayer ID number. Clients will finance $44 billion of mortgages through loans that accept a government-issued alternative to the social security number.