Wednesday, September 12, 2012

Many US families still lack traditional bank accounts - Dallas Morning News

More American families, including many in Texas, still do not have traditional bank accounts, relying instead on payday lenders and other alternative financial services, according to a survey released Wednesday by the FDIC.

There was a bright spot in the 2011 survey, though, as the percentage of these households in the Dallas-Fort Worth area fell from two years earlier.

Nationally, some 821,000 households have joined those who don’t have traditional bank accounts since the federal agency conducted its first such survey examining the issue in 2009. Today, 8.2 percent of U.S. households, or nearly 10 million, have no relationship with an FDIC-insured bank or financial institution. That’s up from 7.7 percent in 2009.

The survey also counted families that have a bank account but use prepaid cards, payday lenders and other nontraditional services. That group is much larger at 20.1 percent of U.S. households, up from 18.2 percent in 2009, though the FDIC cautions that the methodology measuring this group differed from the earlier survey.

Texas also saw an increase last year among families that don’t use banking, according to the survey.

Some 12.8 percent of households here don’t use mainstream banking, up from 11.7 percent in 2009.

The population of those who use nontraditional services in Texas was 27.2 percent, up from 24.5 percent.

In the Dallas-Fort Worth area, the percentage of households without traditional bank accounts improved to 9.8 percent, from 10.8 percent.

Like other cities across the country, Dallas has been trying to get more families into mainstream banking as a way to save money, build an emergency cushion and avoid the larger fees associated with payday lenders and check-cashing businesses.

“We are not a cash society in the United States,” said Alfreda Norman, vice president and community development officer at the Federal Reserve Bank of Dallas, which works with banks and nonprofits on the issue. “All the principles of building wealth are centered around being able to have products and services to do this.”

To that end, the city of Dallas partnered with banks, credit unions and other nonprofit organizations to create Bank on Dallas in June 2010 with the goal of creating 25,000 new bank accounts over a two-year period. The Dallas Fed is one of the partners in the citywide initiative.

The program exceeded that goal by creating a little more than 30,000 checking accounts so far, said Jim Reid, who ran the program on behalf of the city until June. The program also emphasized financial literacy and account management, Reid said.

“The target was checking accounts because people who use check cashiers pay on average $800 a year for check-cashing privileges,” said Reid, president of nonprofit Momentum Texas, which helps entrepreneurs.

Reid noted that many residents in Dallas without bank accounts were low- to moderate-income families, which was reflected nationally and statewide. In Texas, 38 percent of those residents had less than $15,000 in income.

These households are also more prevalent in minority communities nationally and in Texas. Black and Hispanic families made up nearly 46 percent of the state’s residents who don’t have bank accounts, according to the FDIC survey.

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