All for it
November 5, 2009 | alternatives, industry, personal finance | Comments (0)USA Today reports on cities helping the unbanked. Of course, they throw payday lending in with the services the supposedly unbanked people use. They’ll never get it.
People who don’t use banks spend an estimated $1,042 a year on check-cashing services, which charge a percentage of the value of the check, according to a study by the Pew Charitable Trust.
Fear of fees and lack of trust in banks are two main reasons why people do not have bank accounts, the Pew study found. Public scrutiny of overdraft fees on checking accounts, which in 2009 are expected to reach $38.5 billion, has led to congressional legislation that would regulate such fees.
“Clearly lots of lower-income folks are concerned about or have been burned by the tricks and traps of a traditional bank account,” says Paul Leonard of the Center for Responsible Lending. “The big question is whether or not (Bank On programs) are creating sufficient safeguards to prevent the new enrollees from accruing fees.”
Some Bank On programs require banks to waive one set of overdraft fees annually.
“It is a big issue that we need to pay attention to,” says Jerry DeGrieck, who heads Bank On Seattle-King County.
City officials say it is too soon to know whether Bank On participants will really save money but that a bank account is a necessary step toward financial progress for low-income families.
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