Limited use of traditional banks threatens the ability of Mississippi's working class to improve its economic situation, a report released yesterday says. The report, issued by the Mississippi Economic Policy Center and the Foundation for the Mid South, finds that Mississippi has the highest percentage of "unbanked" households in the country.
Roughly 16 percent of Mississippi households do not have a checking or savings account, more than twice the 7.7 percent rate among households nationally. An additional 25 percent of households in the state have a bank account but rely instead on money orders, check-cashers, payday loans, pawnshops and rent-to-own outlets--what the report deems "alternative financial services." These services are almost always more expensive than traditional banking.
The report, "Making Mississippi Competitive: Solutions for Building Assets in Low-Wealth Communities," details how a lack of traditional banking in low-income communities keeps people from developing the wealth and assets to lift themselves out of poverty.
Almost one-fourth, 23.8 percent, of the state's households are "asset-poor," meaning that their total net worth is not enough to keep them at or above the federal poverty level for three months without new income. The state's asset poverty rate is slightly higher than the national rate of 22.5 percent.
Nationwide, the median net worth of households is $88,803. In Mississippi, that figure is $50,765.
The report recommends expanding the use of Individual Development Accounts to increase the net worth of low-income households. IDAs are savings accounts that require monthly contributions and only allow withdrawals for asset-building uses such as buying a home, financing higher education or starting a small business. In return for attending financial training classes, participants in an IDA receive matching funds for every contribution they make.
IDAs offer "the opportunity to begin a pattern in behavior of consistent saving," Necole Irvin, senior program officer for the Foundation of the Mid South, said.
"In the end, the individual has a knowledge and behavior of saving as well as an asset," Irvin said. "IDAs have put thousands of families in homes."
The greatest challenge in increasing IDA usage is finding funds to provide matching contributions. A model exists for that, however, in programs used by both Arkansas and Louisiana. Both states have developed policies that use some federal TANF--Temporary Assistance for Needy Families, or welfare--funds to support IDAs.
Free checking accounts are going by the wayside too. You can direct all complaints to Sen. Chris Dodd
Dunno... maybe BoA isn't offering free checking anymore, but that doesn't mean you can't find it by staying a little closer to home.
Positively Free Checking– Positively Free Checking is a personal checking account with no minimum balance requirement and no monthly service fee.
- Minimum opening balance: $50
- Unlimited check-writing and debit card transactions
- Monthly statement listing cancelled checks; imaged statement available for a monthly fee of $2
- Three check copies provided annually at no charge
- Personal account only
- Some miscellaneous service fees such as dormant, non-sufficient funds, and ATM transaction fees may apply
ValuePlus Free Checking
Our basic checking account. Unlimited transactions and no monthly service charges. With $100 or more, you can open a ValuePlus Free checking account with unlimited transactions. With a free BankPlus CheckCard, you may enjoy the convenience of using a VISA card and avoid the hassle of writing a check. e-BankPlus Online Banking and Bill Pay, and BankPlus2Go Mobile Banking are also free. Free permanent digital canceled-check storage is also provided.
My Way Checking
Make your checking account your own by customizing it with the services you need. Plus, with the many ways to avoid service charges, My Way Checking can be your low cost/no cost checking solution. Bundle My Goal Savings and start saving toward your goal today. Choose your way to make your account free by avoiding the $5 monthly fee when you conduct any one of the following each month:
- Maintain a minimum daily balance of $100, or
- Conduct 5 debit card purchase transactions, or
- Have 1 ACH Deposit of $100 or more
- Todd Stauffer
Also, along these topical lines, it's interesting to see that the banking industry took a bit of a dis-information campaign to Twitter today (gotta love those industry groups) -- See Propublica's piece: Banking Groups Stir Consumer Fears on Debit Card Regulations via Twitter:
Those are all things that the proposed rules wouldn’t actually change. The Fed’s plan would limit the size of the per-transaction fees that merchants give to banks—and that's only for banks with more than $10 billion in assets.
Merchants and banks have given indications of how this fee cap would affect consumers. Merchants have promised that what they save in fees will result in lower costs to consumers. Of course that’s not guaranteed to happen, and not everyone buys that it will.
Banks have warned they may end debit card rewards, increase ATM fees, get rid of “free” checking, or limit the size of debit purchases, as we’ve noted. These threats have caused some consumers to rally against rules that could lower the costs of the goods they purchase.
- Todd Stauffer