Community Banks Help The “Unbanked” Find Financial Security

FNB-Fox ValleyThe Great Recession hit us hard. From Wall Street to Main Street, business owners and consumers alike have spent much of the past four years retrenching, paying off debts and being conservative with their money.

While the economic indicators have been making slow, upward ticks, there are also signs that the tough times are lingering. A recent report from the Federal Deposit Insurance Corporation (FDIC) highlighted just how much with its findings that the number of Americans who have dropped out of the banking system has increased the past two years.

With no interaction with banks, the so-called “unbanked” are vulnerable to higher fees and interest rates, and cut off from creating a financial history that will build the credit needed for future purchases. Rather than using a checking or savings account, this group of consumers relies on payday lenders and check cashers to manage its finances.

The FDIC study found that:

  • 821,000 households withdrew from the banking system from 2009 – 2011, raising the unbanked population to about 8.2 percent of all households
  • Another 51 million adults have a bank account, but rely on payday lenders or rent-to-own services. Referred to as “underbanked,” this population is now 20.1 percent of households nationwide

Some reported they have opted out of regular bank accounts because they cannot afford to absorb higher bank fees or adhere to minimum balance requirements.

While industry representatives defend the fees, this can also be an area of opportunity for community banks, many of which still offer basic accounts that can help this population with its banking needs.

First National Bank-Fox Valley, for example, offers FREEdom First Checking, a free checking account with no minimum balance requirement or monthly maintenance fee. It might be basic and doesn’t pay interest, but there are no fees for check writing, for network ATM use or online and mobile usage.

FNB-Fox Valley offers a simple savings account that starts at $100 as well.

These are simple options that can help consumers with their financial needs and avoid reliance on check cashing services or payday lenders. Without access to regular banking accounts, those who are unbanked and underbanked are likely to remain trapped in a cycle of financial strain caused by the high fees and interest rates of non-bank financial options.

While banks such as FNB-Fox Valley may not make as much money on these accounts as some of the higher service offerings, their leadership is passionate about these offerings being part of the services that community banks provide.

To learn more about the account options offered by FNB-Fox Valley, check out the Personal Banking section of our website.