FDIC Consumer News - Summer 2017
FDIC Efforts Promote Access to Safe, Affordable Financial Services
People who start a banking relationship are taking an important step toward reaching their financial goals. Why? Because banks can offer more than a safe place to put money for day-to-day needs and to save for the future. A checking or savings account can also help people be better prepared to borrow for a car or a home, gain access to free or affordable financial services, and benefit from deposit insurance and other consumer protections. The FDIC works to strengthen connections between banks, nonprofit organizations and agencies at all levels of government to promote “economic inclusion” — to bring more low- and moderate-income Americans into the financial mainstream by improving access to safe, secure and affordable banking services.
The 2015 FDIC National Survey of Unbanked and Underbanked Households found that 7.0 percent of the households in the United States were “unbanked.” An additional 19.9 percent were “underbanked,” meaning they had a bank account but also used nonbank financial services providers for their everyday needs, such as check cashing. The survey also showed that lower-income households, less-educated households, younger households, black and Hispanic households, and households headed by a working-age person with a disability are much more likely to be unbanked. Some of the most common reasons survey respondents gave were a lack of trust in banks, high and unpredictable fees for bank accounts, or the feeling they do not have enough money to justify an account.
With help and encouragement from the FDIC and other regulators, many financial institutions are taking steps to reach out to more consumers in their communities. “Banks are finding that by gaining a better understanding of the needs of the unbanked and offering them useful products and services — including the chance for greater access and control through mobile banking — everyone can benefit,” said Elizabeth Ortiz, FDIC Deputy Director for Consumer and Community Affairs.
There are many banking options that are affordable for most people and do not include costly fees for paying bills or cashing checks. Examples include accounts consistent with the core principles of the FDIC’s “Model Safe Account Template.” This template details what a cost-effective transaction or savings account could look like and how these accounts can fit into a bank’s product offerings. Some banks have initiated “checkless” accounts consistent with the template for people willing to do all of their banking online or use debit cards or mobile apps, and without incurring overdraft fees. For people turned down for an account because of past money-management problems, some banks offer “second chance” checking accounts.
Some banks promote the inclusiveness of their branches by extending business hours or assuring that staff can speak languages commonly used in the community. To address many unbanked consumers’ concerns about ready access to cash, some banks offer prepaid cards that can include access to ATMs, online banking, bill-paying services, and direct deposit.
The FDIC also is finding creative ways to encourage school-age children to learn more about basic money management. Specifically, the FDIC:
- Offers Money Smart for Young People, a series of four financial education curriculums for Grades Pre-K through 12 designed to help teachers, parents and caregivers help young people learn about money.
- Just reported key lessons from a two-year Youth Savings Pilot, in which 21 banks (and their nonprofit and school partners) combined traditional, classroom-based financial education with the opportunity for students to open a low-cost savings account, resulting in thousands of new savers. The FDIC also has a Youth Banking Network with resources for participating banks that want to create or improve their youth savings programs. Start here for more about FDIC youth banking initiatives and resources.
- Trains organizations that conduct youth employment programs in how to provide financial education to young workers.
“The FDIC works with many community-based organizations to provide financial education to people of all ages,” said FDIC Community Affairs Specialist Kay Gregg. “Training on key financial concepts promotes positive banking relationships, the opportunity to build wealth and a more secure financial future.”
Added Janet Gordon, FDIC Associate Director for Community Affairs: “Our staff around the country provide technical assistance and training to local nonprofit community organizations, government agencies and banks to help them identify opportunities to work together and to encourage people to develop their financial capability by using safe and affordable banking services.”
Start here to learn more about economic inclusion. And go here for links to financial education resources. The FDIC also has online Spanish versions of each edition of Money Smart News (the FDIC’s quarterly newsletter for financial educators) and FDIC Consumer News.