The Financial Divide; Financial Inequalities for U.S. Immigrants

The Consumer Financial Protection Bureau (CFPB) has received complaints about these barriers and recently published results from their findings.  

In their research, the CFPB found four major areas of concern: 

• Banking access 
• Language access
• Predatory tactics 
• Education access  

OPA’s survey in Fall of 2021 addressed some of these areas of concern and found, similar to the CFPB results, that immigrants facing these financial barriers can’t fully immerse themselves in American life. 

Banking Access 

In CFPB’s research, many U.S immigrants described how policies at some financial institutions keep them away from access to banking services. Even for immigrants who have lived and worked in the United States 10 years or more, are Deferred Action for Childhood Arrivals (DACA) status, or use an Individual Taxpayer Identification Number (ITIN) to comply with tax laws. Eligible immigrants who can become citizens must have an account to process and pay the many fees associated with the citizenship process.  Of additional importance, 75% of all respondents have an annual household income between $50,000 and $200,000+, which aligns with the US median income for 2020 of $67,521. Working immigrants are earning valuable amounts that merit banking services to assure economic safety, stability, and full inclusion in everyday U.S. society.  Furthermore, banking services are needed for them to complete their citizenship process by paying their fees

Language Access  

Despite immigrants having some knowledge of English, their limited skills make it hard to interact with service providers at financial institutions. This prevents them as consumers from accessing services, fully understanding terms and conditions, and resolving issues around funds and fees. As working members of society, immigrants deserve to have access to translated services in written or verbal format to ensure their money is as safe as anyone else’s. Through OPA’s research, nine percent of immigrants said that language barriers keep them from completing the citizenship application, too. 

High Interest Rate Tactics 

These two previous areas of concern lead directly to the advantageous financial services many immigrants fall prey to. With limited or no access to mainstream financial services and products, many immigrants are driven to service providers who charge high-cost fees or engage in exploitative practices. Often, immigrant consumers are convinced to try these services with marketing in their native language or too-convenient service, but never receive disclosure of terms and conditions which leads to debt, loss of funds, and credit damage. In OPA's research, recently naturalized respondents said they used debt to help pay their USCIS fees; with 87% borrowing funds and 67% of these using high-interest debt. Of the eligible non-citizens, 97% said they would consider borrowing funds to pay their USCIS fees with 88% of them considering high-interest debt. 

Education Access  

For many immigrants, the US financial system is new and confusing. OPA’s survey results found that over 70% of all respondents are “extremely interested/very interested” in free money-management courses. They are willing and ready to learn about and integrate into the American financial system. Similarly, in CFPB’s results stakeholders described financial missteps in their first years of living in the United States due to systemic barriers to financial services access, and a lack of information and resources, can have long-lasting consequences. 

According to the data, prospective US citizenship applicants are clearly motivated to immerse themselves in American life and, if eligible, naturalize. Still, without access to fair credit and equitable banking services, they often must decide between stalling their American dream or accepting high-interest debt. Access to safe, low-cost financial options that will empower them to pursue their goal of US citizenship can address these most commonly cited barriers to citizenship. 

This is why OPA is passionate about its mission to building a community of Americans and future citizens all working toward the greater good of our country.