Did you know that more than 50,000 individuals in King County do not have a bank account? Or that nearly $22 million annually is stripped from them because they are forced to use predatory lenders, check cashing services, and lenders who cater to the poor with promises of quick cash in exchange for outlandish interest rates?
Recently, the County Council passed my legislation that will change those statistics. King County is now a non-financial community partner in an exciting program called Bank on Seattle-King County.
It is a program designed to increase the number of people who use mainstream banks. It has gained widespread support from non-profit organizations, local governments, and financial institutions throughout King County.
In this column, I’d like to talk about why families find themselves in situations where they have to use check cashers or predatory lenders, and what Bank on Seattle-King County is doing to help improve the financial health of struggling working families in our area.
What are the barriers to having a bank account and what is the impact?
Traditional banking services hold many barriers for the “unbanked.” They may require minimum deposits or account balances that individuals have difficulty meeting or maintaining; services and procedures can be complicated in their structure, with fees and penalties for noncompliance. Transaction-based services such as check cashing without a waiting period, bill payment, and money transfers may not be available. Other barriers to using the services offered by traditional financial institutions include language barriers, inconvenient hours of operation and location and mistrust of banking institutions.
Whatever the reasons for not having a financial institution, it is costing many low-income families millions of dollars that could be spent on housing, food, medical expenses, education or transportation. A household with an income of $20,000 can average $800 in check-cashing fees annually. And that’s just for accessing their own, earned money.
What is Bank on Seattle-King County and how will it help?
Bank on Seattle-King County is a public and private initiative to connect people who don’t have checking and savings accounts to affordable, mainstream financial services, including checking, savings, and credit. There are 22 financial partners (such as Bank of America, Banner, Wells Fargo, Chase, Frontier, and Key Bank), nearly 30 community sponsors (including Hopelink, United Way, Luther Community Services, Multi-Service Center and Habitat for Humanity), and several state (Washington Department of Financial Institutions) and national (FDIC, Federal Reserve Bank of San Francisco) partners involved in the effort.
Bank on Seattle-King County will have 300 locations available throughout King County. Services available to participants include:
• Low opening deposit requirement (most Bank on locations require $50 or less for a deposit when opening an account)
• No minimum monthly balance
• No or low monthly fee (most Bank on checking accounts are free; a few Bank on financial institutions charge no more than $6 per month)
• Clear explanation of fees and procedures
• Direct deposit
• Online banking
• Encourage and refer customers to financial education
Over the next two years, Bank on Seattle-King County seeks to have accounts opened for 10,000 citizens who currently don’t have bank accounts. Bank on will also provide financial education to many customers and help them achieve their financial goals.
King County’s role in Bank on Seattle-King County is to distribute information to the public and human service agencies that serve the poor, all at no cost to King County government. To find out more about Bank on Seattle – King County, you can call the 2-1-1 Community Information Line or by visit the Web site, Bank on Seattle-King County.
Julia Patterson of SeaTac represents the King County Council’s Fifth District, which includes part of Renton. She can be reached at email@example.com