By Robert McGarvey

 

Hope. That one word powerfully sums up the mission of Hope Credit Union, a Mississippi delta based community development credit union with more than $280 million in assets.  And Hope is bringing financial hope to people across the deep south who may not have had a lot of that.

How does Hope do this and stay solvent? Listen up to what Bill Bynum, Hope’s CEO, has to say on that, as well as his provocative views about the real mission of credit unions in today’s America, the CFPB, and a lot more.  This is a conversation that will rock you.

McGarvey: Last time we talked you said that you were going all in on mobile banking because your members did not have home computers. Is that still true?

Bynum: That was a big part of the decision. We were one of the first financial institutions in Mississippi to embrace mobile technology because so many of our members didn’t have home computers.  Mississippi and the deep south also have one of the highest rates of homes that don’t have a landline. People are using their cellphones for communications. We thought it was a great opportunity for us to use that technology to provide services to our members.  It actually has gone better than I anticipated. We thought it would take longer than it did for people to become comfortable trusting their financial transactions over the phone. We’ve seen a steady increase in use of mobile banking. They use it for a variety of things, mostly to check their balances. That’s great. They make better financial decisions. The number of overdrafts has declined.

McG: How many members do you have and what’s the average family income?

Bynum: We are pushing 50,000 members. Disproportionately they are low income. The average household income of a mortgage borrower is less than $50,000. That’s someone buying a house. I’d suspect the average household of all members is well south of that. 75% of our branches are in census tracts where the poverty level has been over 20% for three decades in a row. Entrenched, persistent poverty.  

McG: How do you profitably serve that population? The big banks don’t want to have anything to do with that population. They don’t think they can make money.

Bynum: Banks are making tons of money. They were making money in those markets. Just not as much as they want to make. Mississippi is a rural, low income state. So are Alabama and Louisiana. These people need financial services.  Payday lenders, check cashers, pawn shops are making money hand over fist. Charging these people rates that should be criminal. There’s a reasonable amount of profit to be made. I think the credit union business model is superior because we use the profits we generate to provide lower rates on loans and higher rates on deposits.  We don’t take the profits and hand them to a handful of wealthy shareholders. Our members are our shareholders. I think it’s our business model that allows us to do what we do. It’s appropriate that credit unions are tax exempt. It helps our bottomline.

McG: I’m simplifying but in the US credit unions were created to serve a population banks did not want to serve. Working people. Mainly they made loans – home loans, car loans – and took in savings deposits.  It seems to me a community development credit union such as yours is doing that mission. I’m not sure all credit unions are following that mission.

Bynum: Community development credit unions are clearly focused on serving people in communities that are underserved by other financial institutions, including other credit unions. Many of the credit unions we have merged with are small credit unions that were formed in response to predatory lending and lack of access to financial services. We merged with a credit union in Mississippi for timber workers who started it because the timber company charged exorbitant rates for loans. We merged with a credit union in Montgomery that served local teachers who needed better access to financial services. That is the history of credit unions and community development credit unions take that very seriously.  That is at the core of our mission at Hope.

Mcg: Why aren’t there more community development credit unions?

Bynum:  A lot are doing good work. A challenge [in creating more] is that we are not in a position to sell stock to raise capital. We have grown dramatically since the financial crisis. We are one of the fastest growing credit unions in the country, by rate of member growth and rate of asset growth.  Growth requires that we have capital to keep the regulators satisfied and to protect our depositors. Typically credit unions grow their capital in a slow, organic way. When we are growing rapidly we need to find other ways to raise that capital. We use secondary capital, subordinated longterm debt.  We are one of two credit unions in the country that use that resource more than anyone else. It’s complicated. Many small credit unions don’t have the infrastructure to take that on. We are fortunate we are able to do that. It’s not a simple strategy to pursue but we felt it was important.

McG: What other credit union does this?

Bynum: Self-Help. Between Self-Help and Hope we probably use more than half of the secondary capital credit unions use in the country.

 

McG: What’s your position on payday loans?

Bynum: Payday loans should be illegal. I served as chair of an advisory board at the Consumer Financial Protection Bureau and we were making strides at restricting these abusive financial practices. So many things are stacked against low income consumers. That agency was created to address that. It’s unfortunate it has stepped away from those issues.

McG: I’ll tell you what I think was unfortunate: a lot of credit unions from the beginning were enemies of that agency.  

Bynum: It was misguided. I spoke against it. Financial institutions often have a knee jerk reaction to regulation. Well, we should be regulated because we are stewards of other people’s money and we need to do it in the right way. We saw what happened with the lack of regulation with the financial crisis. As credit unions we should be on the front line of consumer protection. It’s often used as a wolf whistle by the credit union trade associations to organize their members.  It does not serve our members well.

McG: When you talk with credit union peers, what do they think about what you are doing?

Bynum:  People wrote our epitaph – our eulogy – a long time ago. But we are in our 25th year now. It would behoove credit unions to look at what we are doing well and try to emulate it. The country is becoming more diverse.  The communities we serve are increasingly becoming the majority. We have to be relevant to those populations. Financial institutions – credit unions included – ignore them at their own peril.

McG: How do you make money on a small dollar, payday type loan?

Bynum:  We see it as a gateway, as an entry relationship.  People will take out a $200 loan at a payday lender that costs $2000. We’ll refinance that loan at a reasonable rate. Then we’ll get that individual into a banking relationship that will help them.  We don’t look at it as a single transaction. We look at it as part of a relationship.

McG: What kind of rate do you typically charge?

Bynum:  16%, maybe 18% for a small dollar loan. Sometimes it’s less. We have a very cool product that many of our members use called Borrow and Save. You need a $250 loan. We’ll write you a $500 loan where $250 goes into a savings account. When you pay that $500 you have $250 in a savings account that is there for you to tap when you have the next emergency. You now have a relationship with a depository that will help you meet your needs.

You ask how we do this and make money. Well, we do it to break even. Our mission isn’t making as much money as we can.  Our mission is improving lives of people in some of the most distressed places in this country.

 

A longer version of this conversation – in a podcast format – is available here for listening.

McGarvey on CU Technology: CU2.0 Podcast Episode 13 Greg Woolf on AI and Your Credit Union http://bit.ly/2EeAJyz

 

By Robert McGarvey

 

Another day, another hotel breach. Face reality. Hoteliers suck at protecting your data. There is no gentle way to put that. They really, really stink.

Hotel News Now has a piece that explores the many hotel data breaches over the last decade. Read it and weep because it is your data that now is in play on the dark web.  

Can you in fact stay in hotels and protect yourself? Maybe, we offer tips below. But, first, feast on how inept hoteliers are at data security.

Hotels treat your personal data – name, address, credit card numbers, passport info – the way a deadbeat treats yet another bill collection notice.  

HNN traces the history back to 2010 when there was a big Wyndham data breach. That prompted an FTC suit against Wyndham that eventually was settled. I covered this and, honestly, I find it increasingly tiresome to write about the hotel industry’s cluelessness, or maybe just indifference, to guest data security.

Along the way White Lodging, a management company, had data breaches. So did Trump. Mandarin Oriental.  Hilton. Hard Rock. Kimpton. Noble House. IHC. Sabre.Hyatt. Radisson. Many more.

And now there’s Marriott where maybe 500 million guests were compromised. Apparently because of Starwood data insecurities.

Marriott has not been forthcoming about specific details pertaining to the breach.  It has said it is notifying customers who have fallen victim – so expect a phone call, or email, if you’ve stayed at a  Starwood in memory. (For the record here’s the company statement on the breach.)

Word of immediate advice: right now go and check any rewards accounts you maintain at Marriott.  There are suggestions that maybe these crooks were after those points – there is no confirmation on that front – but it is believable because there’s increasing evidence that hackers are hungry for points and miles that are fairly easy to convert into cash or cash equivalents (like an iPad or iPhone). Make sure all is copacetic and if it’s not, raise a loud yell at the nearest Marriott rep.  

Should you in fact expect meaningful compensation? Nah. That rarely is on offer. If points were stolen, almost certainly they can be restored. But beyond that I suggest never holding one’s breath in expectation of real compensation for pains suffered in a data breach.

The usual compensation is a year or two of monitoring of credit and dark web activity by a namebrand cybersecurity outfit. My favorite such is when T-Mobile revealed some 15 million applicants for credit – yours truly among them – had their data compromised when a server maintained by Experian was hacked. Victims were offered free credit monitoring by, you guessed it, Experian.

What can you do to protect yourself?

Do make it a practice to get free activity reports from such as MasterCard. Closely monitor credit activity and do stay on top of accrued rewards points. If offered free credit monitoring by Marriott, sure, take it.

Accept that by now bad guys know all your private data, from Social Security to your health insurance number (yes, there’s brisk trade in health insurance documents).

So what more can we do to protect our data security? Personally,  I cannot recall the last time I booked directly with a hotel, despite their massive push for that. I use OTAs and many of them have tech company roots and, as an industry, tech has fared a lot better in regard to data privacy than have hotels. OTAs aren’t perfect but I’ll bet on them before a hotel company. In that regard I’ve liked Expedia and will soon start using Google.

But what about the nasty business of check-in where the desk clerk asks for a photo ID and credit card? I am increasingly tempted to buy a fake (“novelty) Nova Scotia driver’s license – on sale for $89 or maybe an Irish driver’s permit for 30 quid.  Use a fake name – maybe Michael Collins – a fake address and I have a good ID to flash at check in at a hotel.

Then I can ask an issuer of a credit card that I already have to issue a supplementary card in Mr. Collins’ name.  Bills continue to go to me and I would make monitoring the account a prime task because there really is no trusting the hotel.

Isn’t this extreme? Of course.  But if hoteliers refuse to take the proper precautions to safeguard our data we have to take our own precautions. And traveling under a false flag may be just the answer.

Have different suggestions on staying safe? Have at it in the comments box below. I’m at wit’s end myself, forced to cogitate on forgeries. Better ideas are welcome.

McGarvey on CU Technology: CU2.0 Podcast Episode 12 Bill Bynam CEO of Hope Credit Union http://bit.ly/2E1NV9V

 

By Robert McGarvey

 

I need to count myself lucky.  The Points Guy has again annointed Phoenix- Sky Harbor Airport as the nation’s best and, because I live in Phoenix, I am in and out of it with some frequency.

I still remember when I first saw it – 1974 on a business trip – and I was a north Jersey kid who had lived in Boston and moved to Washington DC for a job.  I just did not understand that at Sky Harbor the way to exit was that they pushed some kind of stairway out to the plane. Back then, it seemed so, well, hick.

A lot has changed at Sky Harbor as Phoenix has grown to be the nation’s fifth biggest city.

Understand, I moved to Phoenix six years ago, after a stint in Jersey City where my regular was EWR, just a few miles away from my home. I actually grew to like Newark Airport, mainly out of familiarity, but you could also call it a product of the Stockholm syndrome. EWR, per the Points Guy, is in a race for the bottom rank against its Port Authority brethren, LGA and JFK. Okay, they all suck. But when you live there, you get used to them.

When I moved to Phoenix I saw – vividly – what a better airport really looks like.

What made Sky Harbor number one in this ranking? According to the Points Guy: “What’s Sky Harbor doing right? Like last time, it didn’t come in first in any one category but made strong showings in nearly all of them, including being easily reached by car or bus, having cheap parking, negligible wait times at security compared to other airports and respectably low delay and cancellation rates (though it could use more lounges for its size).”

Yep.  I get there via Light Rail -$2 for a one way fare – that takes maybe 20 minutes from my door.  Inside, I remember only once encountering a daunting security line – I stupidly was flying on the Monday of a three-day weekend in the spring and Phoenix had filled up with students on break as well as Cactus League devotees.  My bad. I still made my plane. But it was not the fast stroll that security usually is at Phx, even without TSA Pre (which I acquired only a year or so ago).

With Pre, by the way, security is in the blink of an eye.  Painless, no friction, pleasant TSA staff.

Flights don’t often get cancelled at Sky Harbor.  The most common reason is heat.  But that’s rare.  A big plus for Phoenix.

As for lounges, I usually head to the Priority Pass lounge in Terminal 4.  It’s okay but I would not write home about it. I’ve been in various airline lounges at Phx and they too are okay (if rather overcrowded).  Put a Centurion Lounge in Sky Harbor and I’d do cartwheels but I don’t see that on the Amex roadmap. Pity.

If you get into a lounge free at PHX, do it.  (I have access via Priority Pass, also Diner’s Club.) But I wouldn’t part with a sawbuck to buy entry into any of them.

Another grumble: Sky Harbor is not a truly international airport. Sure, it has flights to Canada and Mexico.  Also Frankfurt and London. There’s a flight to Costa Rica. That’s about it.  Sorry. If you are going to Paris or Singapore or Helsinki you are going to fly to Heathrow or Atlanta or JFK or Lax first.

To me, this is a bummer. I lived most of my adult life in cities where international flights were plentiful (Washington DC, LAX, and EWR).  

The restaurant situation could be better – but it at least has put an emphasis on local joints, not only big chains.  Barrio Cafe, La Grande Orange, Cartel Coffee, Matt’s Big Breakfast are all Phoenix local staples that I can recommend.

So PHX isn’t a culinary wasteland. Even if it doesn’t hit foodie home runs.

But you adjust.  And you accept that PHX still does lots of things very well indeed.

Incidentally, it’s not just the Points Guy who showers love on Sky Harbor. It placed third in a Wall Street Journal ranking.  It placed in the top 10 in a Conde Nast Traveler ranking (number 7 to be exact).

Is it simply that Sky Harbor is good because it is small?  That occurred to me and, no, it’s not that small. PHX ranks as the 9th busiest airport in the U.S.  O’Hare, DFW, JFK, Atlanta of course are much bigger.  But Phoenix can’t be dismissed as tiny.

So why is it good? Maybe it’s because it strives to be the friendliest airport and, in many ways, it succeeds.  It also is clean and when it has a failure – bed bugs for instance – it attacks the problem with the aim of fixing it.

And Sky Harbor also simply seems to believe it can be good and efficient.

Generally it succeeds.

McGarvey on CU Technology: CU2.0 Podcast Episode 11 Jay Murray Vizo Financial http://bit.ly/2RUb7de

 

By Robert McGarvey

 

Going, going, gone are the days when a business traveler can call a hotel and cancel a room for that night without penalty if the call is made by 6 p.m. Hoteliers have figured out they can monetize your booking even if you don’t want it by imposing arbitrary deadlines for cost free cancellation.

Worse, the policies are all over the map. Most hotels want 24 to 72 hours notice. I have seen some that insist on a week’s advance cancellation. There is no consistency or uniformity, often none even within a specific chain.

That has to be a major worry for many business travelers.

How often do you have a business trip cancelled the day before departure?  It happens. I’ve even have had cancellations on the day of! Not often but sometimes and, until now, I have been able to cancel hotel rooms without any penalties. (I also have always been able to cancel flights without penalty because I insist on booking fares that allow for that.)

Know that, below, we provide you with a cheat sheet that will help you know when your hotel’s deadline is for fee free cancellation.  Sometimes.  Not always because, again, there’s no real consistency. This isn’t a game rigged in our favor.

For starters, however, why have hotels overturned long established policy that allowed that fee free cancellation up to 6 p.m. the day of arrival? Hoteliers will tell you they can’t book rooms cancelled at the last minute. They also say a cancelled booking costs them money.

Rubbish.

A good travel agent, by the way, often can cancel a room with little notice and no penalty for a client. Meeting planners almost always can.

Why can they do it and you can’t?  Again: the hotelier wants to grab your dough whether you want the room or not.

The blunt fact is that – with or without your unwanted room – the typical hotel will have lots of empty rooms that night. The average hotel occupancy rate in the United States is 68%. On any given night one in three rooms goes unsold.

A different data set claims that in 2018 hotel occupancy hit a 30 year high when it reached 66.1%.

Anybody who tells you that if you had only cancelled your room earlier, then they could have sold it to another guest but your late cancellation costs them money is blowing smoke.

They don’t want to let you cancel scot-free because they hope to be able to shake some coins from your pockets.

Don’t let them.

A starting point is knowing what you are up against. Here is a chain by chain breakdown compiled by Travelmarket report:

• Marriott – 48 hours. If you want to cancel a room for Wednesday night, do it by mid-day Monday to be safe.
• Hilton – 48 hours. Some resorts impose a 72 hour cancellation policy. Always check when reserving.
• Hyatt – 48 hours – except “some” ask for more notice. Again, always ask.
• IHG – 24 hours at Holiday Inn, Candlewood Suites. Kimpton wants 48 hour notice.
• Ritz-Carlton – 7 days notice of cancellation. That’s right. A week.
• Fairmont – no set policy. Varies by property.

Frustrating? You bet. The bottomline is that it is incumbent on you to ask when booking.

Plenty more hotels now want cancellation penalties too. NYU professor Bjorn Hanson, who tracks hotel fee income, has said he sees many more hotels climbing on the cancellation fee bandwagon.  For the hotel this is essentially expense free income. An unccupied room that is paid for is pure profit.

No wonder hoteliers love this fee.

What’s a traveler to do?

My advice has been and remains: don’t book until the same day of travel.  No, you won’t have to sleep on a park bench. I have often checked availability in prime cities – Chicago, San Francisco, Washington DC, New York – and always find availability at the last minute.

Always.

The HotelTonight app is your friend. Use it.

Or TripAdvisor. I just looked for a room in Chicago tonight and TripAdvisor said about 75% of its hotel inventory had availability.

Don’t some hotels sell out? You bet.  Very occasionally and not very often but some hotels do sell out. Many resorts definitely sell out for prime dates (good luck booking a July 4th stay in desirable Cape Cod even this early – many of the swankiest joints already have solid books of business).  And I don’t think I have ever found availability at Marriott Marquis adjacent to McCormick Place in Chicago so, sure, sometimes even meetings hotels fill up.

But I have always found rooms in Chicago. Just not in walking distance to McCormick Place.

Ditto San Francisco.

Etc.

So the prevailing rule is that if you hunt and if you have some flexibility, you will find a room and probably it will be convenient.

Paranoid? A day before travel – when that trip looks to be solid – check for rooms. If you fear scarcity, book then.  You will probably travel the next day and not have to worry about cancellation fees.

But to be really safe here’s the three part rule book: Just say no to hotel cancellation fees. Book on the day of travel.  Never pay a cancellation fee again.

 

 

McGarvey on CU Technology: CU2.0 Podcast Episode 10 Amy McGraw, Tropical Financial on the Student Loan Crisis http://bit.ly/2DwHOKM

 

By Robert McGarvey

 

I like it. That’s my verdict on the Priority Pass  expansion into airport restaurants. Necessity doubtless mothered this invention and I’d had a healthy skepticism about it. But after a lunch stop at terminal 8 at JFK, where Bobby Van’s was my only club option, I’d give this gambit a qualified thumbs up.

Priority Pass comes as part of my Platinum card perks via Amex.  I don’t mentally calculate it as costing me anything. And at participating restaurants it antes up $28 ($56 with a covered guest).

The one hesitation about the Bobby Van’s stop: lunch cost me around $55 for two but that included a couple glasses of decent red apiece – a Rosenblum Zin along with a turkey club, a veggie burger, fries and finishing with coffees. Total tab, with tax and tip, around  $112. Priority pass ponied up $56, I covered the rest.

Yes, a typical visit to an airport club costs me nothing but I also rarely see anything worth eating and I typically drink only coffee because, again, there’s nothing I want and the coffee isn’t any good either.

This way I got a pleasant lunch, in a quiet venue.  It made me forget that I’ve avoided JFK  for over 20 years because I find everything about it painful.  I still don’t like going to JFK but at least in terminal 8 I’ve found an option I like.

Of course I also could have cut my out of pocket to around zero with more frugal ordering.  But it was noon, I was in pricey New York, so why not eat well before a cross country flight where I could skip the inflight food without listening to my stomach growl.  

So I am okay with the Bobby Van’s deal.  

And the restaurant got a visit from a first time customer who may well return.  It also presumably gets a few bucks from Priority Pass.

Will I always want to drop $50 on a lunch for two, or $25 just for me? Probably no. But, again, I don’t have to.  Doing this just with the $28 per head credit is possible. Just order accordingly.

Buy a burger, a beer, and toss down $5 in cash as a tip and you are good with this deal even at JFK.

Meantime,  back at the standard airport club, mainly I am seeing crowds. Just getting seated is a hassle.

That’s true also at the Amex Centurion lounge which still ranks as my airport fave if I can get in.

But overcrowding has become a staple at Centurion.  Sigh. Amex is also putting restrictions on entry. A perfect airline club is becoming less so.

Even when I can get into an airport club I often wonder why I bother. Last week at the Priority Pass club lounge at Phoenix terminal 4 I got in at no charge and managed to get the last seats but there was nothing worth eating.

Free is not always the best deal.

Priority Pass, apparently confronting a lack of available club spaces at airports, has decided to hunt for restaurant partners and I am hoping it works for all – Priority Pass, the restaurants, and of course the travelers.  Want more info about Priority Pass, its challenges and opportunities? Read Joe Brancatelli’s column on this – it gives the full scoop.

Face it, we need more options at airports. I had become so cynical, I had even begun extolling the virtue of scorning clubs and sitting amid the ordinary passengers, with a Starbucks latte in hand.  But maybe things aren’t quite so desperate.

Looking at the Priority Pass restaurant options, there are around two dozen, with more to come, they say.

Many are modest – Johnny Rockets at Syracuse airport, for instance. In those joints the Priority Pass credit should go far indeed.

At Barneys Beanery at LAX, $28 should get you the chili sampler and a beer. Add a$5 in cash for the tip and you are good.

Bottom line: check the Priority Pass app because you just may find fresh options at the airports you find yourself in.

 

McGarvey on CU Technology: CU2.0 Podcast Episode 9 Tanan Miles ENT Credit Union http://bit.ly/2JHCjsV