According to the White House Council on Economic Advisers, about 7 percent of American households lack access to a bank account, while another 20 percent have a bank account but supplement it with non-traditional financial services like check cashing or payday loans. In an effort to address the problem, the United Way of St. Joseph County recently joined with other area United Ways, 1st Source Bank, the South Shore Line and Chase to launch the Northern Indiana Bank On Alliance.
Among more than 60 Bank On coalitions nationwide, the alliance works to ensure that Elkhart, Lake, Porter and St. Joseph county residents of all incomes have access to safe and affordable financial products and services. Partner financial institutions, including 1st Source, First Federal Savings Bank, Woodforest National Bank, First State Bank and Centier Bank in St. Joseph County, offer no- to low-cost checking accounts, savings accounts and more. Other partners offer free in-person and online financial wellness classes on topics such as spending and saving, borrowing, money management, self-sufficiency, business planning and home ownership.
“We’re trying to find ways for people to be part of the banking system, but in a fair way where they’re not being taken advantage of,” said Judith Fox, a clinical professor of law at Notre Dame Law School and a member of the board of the United Way. “A lot of people don’t participate in the mainstream banking system because they can’t, and that costs them a lot of money.” Banks often charge fees for services like checking or savings if the account holder cannot maintain a minimum balance, Fox said, forcing many low-income residents to rely on expensive check cashing or payday loan businesses for their banking needs.
According to estimates, the check cashing industry generates $1 billion to $4 billion in annual revenue alone, Fox said, “money that could be circulating in the community in a productive manner.” Led by the Cities for Financial Empowerment Fund, Bank On provides an established platform to build and grow the alliance, Fox said, including national account standards consistent with Federal Deposit Insurance Corp. guidelines.
“We don’t have to reinvent the wheel,” Fox said. “They have standards for what a good bank account looks like, and it’s backed up by a lot of research.”
For more information, visit www.niboa.org.