The Pew Charitable Trusts have announced the launch of a two-year, $2.1 million initiative to help U.S. workers underserved by mainstream financial institutions secure access to safe, affordable, fair, and empowering bank accounts.
The Safe Banking Opportunities Project will work with industry representatives, state and local governments, consumer advocates, and personal finance experts to develop bank account standards for moderate- and low-income households that are new to or have been left out of the mainstream banking system. The project will also work to promote voluntary adoption of the standards by banks and credit unions and educate the public.
According to Shelley Hearne, Pew's managing director of health and human services, millions of households that lack a basic bank account rely on expensive check-cashing establishments to cash their paychecks. These alternative financial service businesses are estimated to charge full-time workers some $800 a year to cash paychecks. There are also millions of households that do have basic bank accounts but stand to lose hundreds of dollars a year in confusing, expensive bank fees.
Pew noted that promoting safe basic financial services is especially important during the current economic downturn, when people face a growing imbalance between their income and costs of living. Families will better manage this downturn if they can cover rising food and gas prices instead of putting their money toward cashing paychecks and paying bank fees.
"Too many families today face a dizzying and overly expensive array of choices to meet their basic banking needs," said Safe Banking Opportunities director Matt Fellowes. "This project strives to cut through that complexity by developing and promoting a safer, more affordable basic bank account alternative that serves the bottom lines of both consumers and banks."