#190. Banking the “Unbanked”
Posted on | The Agurban
The City of Evansville, IN launched a program earlier this month to bring people who traditionally rely on payday lenders and cashiers checks to pay bills, into mainstream financial institutions. The “Bank On Evansville” initiative will help the “unbanked”, those residents who have relied on alternative financial services, have a safe place to keep their funds, establish financial records and keep more of their money instead of paying high check cashing and other fees.
“Access to affordable financial services, and taking steps to avoid bad credit or unmanageable debt, are the keys to financial stability and the broader economic vitality of our community,” said Evansville Mayor Jonathan Weinzapfel.
The program will allow more families to become self- sufficient, while bringing more people into the economy to help retailers and other businesses. Also citizens will have more of their money available to pay bills, build assets through saving, and improve their credit rating.
Based on US Census data, it is estimated that 6,000 households in the City of Evansville are unbanked. With over 57,000 households within the city, this means that more than 10 percent of city households are unbanked. Some families spend as much as $75 a month, or $900 per year, on cashing checks and getting cashier’s checks to pay their bills. In addition, Evansville residents spend as estimated $6 million each year on payday lending fees. Nationwide, a recent Brooking Institution report found that moderate and lower income households pay over $8 billion in fees to non-bank check cashing and payday lenders just to meet their basic financial service needs.
The Bank On program began in San Francisco, but has been picked up by the Institute for Youth, Education, and Families (YEF Institute) at the National League of Cities. The YEF Institute is launching new programs in about a dozen cities throughout the U.S. To learn more about the program, visit www.nlc.org/iyef.