Taking it All into Account

SparkPoint Expands “Bank On” Program to American Canyon

Did you know that people without bank accounts spend an average of $40 to cash just one paycheck when they use payday lenders or check-cashing stores? Even worse, this can add up to as much as $40,000 over the course of their careers!

Fortunately, Bank on American Canyon now makes it easy for unbanked residents open bank accounts and avoid expensive check cashers and payday lenders. The program was launched today by SparkPoint American Canyon and United Way, along with local banks and credit unions.

3 members of the SparkPoint American Canyon team - Stacy Lopez, Dianna Gonzalez and Sherry Tennyson - celebrate the launch of Bank on American Canyon

Bank On American Canyon simplifies the banking process, so that everyone is welcome and able to open a bank account at a reputable financial institution. In the Bay Area, the Bank On program is also active in San Francisco and Oakland.

“Everyone at Umpqua Bank is very pleased to support families in our community and financial sustainability through this great program,” said Denise Chisley, AVP Store Manager for Umpqua Bank, which is a Bank On American Canyon partner. ”We are a community bank deeply dedicated and committed to the prosperity of our community, and I am proud that Umpqua Bank is supporting this initiative.”

Residents who wish to know more about Bank on American Canyon or want help getting a bank account can call 707-980-7024.

Read the press release, “SparkPoint Launches Bank on American Canyon.”

Taking it All into Account

Payday loans can carry annual interest rates of almost 400%

The recent Great Recession has among other things caused many low- to moderate-income individuals to turn away from traditional financial services like banks. The reasons people give range from convenience to having quicker access to their paychecks. A recent USA Today article quotes many people who are turning to check cashing places because either they’ve had a bad experience with their bank or have been charged excessive fees.

This is part of a larger trend nationally, and certainly one that we see here in the Bay Area. As many as 26% of Oakland residents are “unbanked” (as compared with 8% of all US households, 17 million people), with African-Americans and Hispanics much more likely to use alternate means of banking than whites.

Locally, through our Bank On initiative we’ve been trying to reverse that trend and bring families back into the banking system for a number of reasons. The convenience that many people cite has hidden costs. This is something we’ve covered in this space before as there are many different services that appear to aimed at low to moderate income individuals that promise less hassle or convenience but have hidden costs that add up quickly. From the article:

A 2008 study by the Pew Charitable Trusts estimated that the average “unbanked” household in California spends $700 a year just to cash checks. When they need to borrow money, unbanked consumers often turn to payday loans, which carry annual percentage interest rates of 380% or more.

Additionally, studies show that people with bank accounts are more likely to save and move up the economic ladder to financial security. This is why Bank On is a key part of United Way’s strategy to help families gain financial stability as we move towards our goal of cutting poverty in half in the Bay Area.

The whole article is worth reading, and it even gives a nod to the efforts of United Ways around the country who are also using the Bank On model which works with major financial institutions to offer “second chance” accounts.

(photo via flickr user Jeremy Brooks)