The Federal Deposit Insurance Corporation’s (FDIC) 2009 survey of households reveals that 7.7% of California’s households are unbanked, while 15.2% are underbanked. Collectively, this means that nearly 3 million Californian households, or 9 million individuals, do not have mainstream bank accounts that would allow them to preserve and grow their assets. CRC has designed an affordable bank account-- the SafeMoney Account-- that banks could adopt to better serve low-income consumers.
People without bank accounts have a higher risk of losing their money through theft or fraud, have fewer opportunities to build good credit history and tend to pay more for basic financial transactions (such as paying bills) and to finance major household expenses (such as buying a car). African- Americans and Latinos are over a third of those Californians without bank accounts and are therefore disproportionally left out of conventional financial opportunities. Very low income households are also disproportionally affected- over 40% of those who are unbanked in California make less than $30,000 a year.
CRC works to increase access to affordable and convenient bank accounts that help households save money and establish a consistent financial identity so they can access more affordable finance options. We do this by tracking the costs of the major banks’ basic saving and checking accounts, including overdraft and other fees, publicizing the most egregious costs and practices, and negotiating directly with the banks to get them to reduce these costs and make them more easily avoidable for everyday uses. We also evaluate efforts by local governments and major regulators to increase affordability and access to bank accounts and work with them to make their programs more responsive to the needs of the average lower income customer.
In early 2011, CRC issued a “Bank Report Card” detailing how California’s top six banks serve basic banking needs. Currently, CRC is working to develop a model “Lifeline Bank Account” product that banks should offer to help people avoid unnecessary fees, easily make transactions, and save money that can be used to achieve personal goals.
Nearly 3 million California households do not have access to a basic checking account.