City Looks To Secure Unbanked NYers
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A new study finds hundreds of thousands of New Yorkers don't have bank accounts. In fact, in some neighborhoods, more than half of the adults are unbanked. Now the city has a plan to try to bring them into the financial mainstream. NY1's Tara Lynn Wagner filed the following report.They're called the unbanked -- people who don't have checking or savings accounts but instead rely on fringe services like check cashing outfits to manage their money. While roughly seven percent of households nationwide fall into this category, the study found 13 percent of households in the city keep no money in a bank.
"This translates to an estimated 400,000 households or about 825,000 adults. That's a lot of people without a bank account," said Department of Consumer Affairs Commissioner Jonathan Mintz.
Studying the issue for the first time, the Department of Consumer Affairs found that almost half of the unbanked population lives in just 10 neighborhoods -- with the highest percentage found in the Mott Haven/Melrose section of the Bronx, one of the country's poorest communities. Fifty-six percent of households there have no accounts with a mainstream bank.
"Those are neighborhoods where there is a concentration of lower income families. I think historically there has been an issue of access to mainstream financial institutions," said Office of Financial Empowerment Deputy Commissioner Cathie Mahon.
But access isn't the only issue, or even the main one. Mintz says more often than not, it's a question of trust.
Our research shows that sometimes they don't trust that when they open a bank account that at the end of the month all of that money will be there," said Mintz. "Overdraft fees have driven a lot of people away from the banking system."
"Getting a relationship with a financial institution is really the pathway towards building savings and accumulating assets," said Mahon. "It's the way to build wealthin this country."
The city is looking to expand a program called NYC Safestart Account. So far, 10 banks and credit unions offer the ATM starter accounts designed to introduce or reintroduce city residents to mainstream banking.
The accounts are available to anyone and require a minimum balance of only $25, and have no monthly or overdraft fees. Mintz says this allows people to avoid places that charge a fee for simple transactions like cashing a check.
"You shouldn't have to pay somebody to get your paycheck. You're working too hard for that money and there's no reason that somebody should take a cut of it," said Mintz.
To find out more about NYC Safe Accounts, call 311 or visit the DCA online at nyc.gov/consumers.