Image bank | Photo by iamnoonmai / iStock / Getty Images Plus, St. George News
ST. GEORGE – In an effort to serve those who are either underbanked or totally unbanked, some local banks are trying various approaches to help people avoid fees that could make an already difficult financial situation even more difficult.
According to the Federal Deposit Insurance Corp, about 5% of U.S. households are unbanked, meaning no member of the household has a checking or savings account, and 11% are underbanked or have no sufficient access to traditional financial services.
Melanie Jordan, senior vice president of retail deposit products for Zions Bank, told St. George News that Washington County was on average fairly close to national averages, with 3.8% of residents unbanked and 15 , 5% underbanked.
“Unbanked or underbanked people end up relying on more expensive products like check cashing services, payday loans and prepaid debit cards,” Jordan said.
On average, unbanked people spend 5% of their net income on “unnecessary fees for alternative financial services,” Zions Bank said in a press release shared with St. George News.
Even the simple cashing of a paycheck can incur costs for someone who does not have a bank account. While some banks cash checks drawn on their accounts for free, others require the payee to be a customer of the bank.
Retailers such as Walmart or Smith’s Food and Drug will also cash paychecks ranging from $ 4 to $ 8, but two-party checks are more difficult to cash and incur higher fees. And check cashing services can charge anywhere from 2.5-10% of the total check amount, plus a service charge.
In addition, a to study of the University of Virginia reported that unbanked people are more likely to be victims of crime, especially robbery, because they often carry large sums of money on them or hide them at home.
In response to the problem, Bank of Zion launched OnBudget Banking earlier this month, which has no minimum balance or overdraft fees. Jordan said it can help low-income households overcome barriers that might prevent some from opening an account. OnBudget Banking has a monthly fee of $ 5 and includes mobile banking and a Visa debit card.
Another local bank, the State Bank of Southern Utah, also offers similar incentives for unbanked or underbanked households. The bank’s chief marketing officer, Tyler Brown, told St. George News that they are always looking for ways to better serve their customers.
“We’re sticking to the basics,” he said. “We have offered free checking accounts, which have no minimum balance or monthly service fees., for many years. Our student checking account is free and we waive the first two overdraft fees per month.
Stan Sorensen, director of marketing at Altabank, which opened in 1905 in Lewiston, Utah as Lewiston State Bank, said he and his colleagues had had many conversations about how to help unbanked and underbanked people. Altabank offers some free services but requires a minimum balance.
“Our checking accounts have a minimum balance of $ 100,” Sorenson said. “With this, customers benefit from free online and mobile banking, as well as online bill payment. “
Sorensen said Altabank charges overdraft fees, but they don’t see much on a monthly basis.
Financial advisors recommend that consumers do their research on different banks and credit unions to find the best programs that best suit their individual needs and financial situation.
Copyright St. George News, SaintGeorgeUtah.com LLC, 2021, all rights reserved.