As hard as it is to believe, up to 50 percent of Chicagoans do not have bank accounts. But without a bank account, it’s a lot harder to establish good credit, rent a car or even buy an airplane ticket.
Why don’t people have bank accounts? Some say it’s too expensive. Others say they don’t trust banks. But whatever the reason, financial experts say if you don’t have a savings and checking account, you’re destined to be left behind in our increasingly electronic world.
“Without a bank account, it’s very hard to do anything in life. You can hardly buy a car, you can’t buy a home very easily,” says Jimm Cobb, Shorebank.
And it takes a whole lot longer to get your refund from the IRS. Which is of particular concern this time of year because if you ask the IRS to send you a check, it could take 6 to 8 weeks to receive it.
“If you don’t have a bank account and the check happens to get lost in the mail or stolen, then it’s another few weeks because you have to reapply for a check. With direct deposit, it’s guaranteed, it’s insured and it’s safe,” Cobb says.
And you’ll have your money in as little as 10 days. Low-income families earning less than $35,000 per year are less likely to have a bank account than families with a higher annual income. Instead, they’re using currency exchanges to conduct their financial business. That’s an expensive way to go.
“They charge high interest rates. They charge high currency fee rates,” Cobb says.
But that’s not the worst of it.
“We all know that you risk your life when you go into a currency exchange. You’re either taking money in or bringing money out. There is no way you can save money in a currency exchange,” says O.S. Owen, Center for Economic Progress.
Which is why the Center for Economic Progress is pushing to open 1,000 new bank accounts for local residents. A special free bank account, with no fees, is being offered tio Illinois residents.
“The accounts we offer have no monthly balance, no minimum fees,” Owen says.
In addition, the center is offering free classes on how to manage bank accounts, including how to balance your checking accounts. So, if you’ve had a bad experience with banks in the past, either because you’ve bounced checks or closed accounts without paying fees that were owed, you can start fresh.
“You can go to them, sit down with their financial advisors, go through a couple of classes and get certified and then you can come to Shorebank and open up a savings or checking account,” Cobb says.
Because if you can open up a savings account and manage it wisely, it’s a big step toward developing true wealth.
“It’s allowing those families that have incomes under $35,000 or individuals under $15,000 to become banked. To become part of the financial mainstream. Which means they’ll be able to make better financial decisions for their families,” Owen says.
Last year, the Center for Economic Progress was able to open up more than 700 bank accounts for Chicago area residents. Of those, more than 95 percent are still open. They are hoping to break that record this tax season.
Center For Economic Progress Shorebank 3401 South King Drive Chicago 60616 www.shorebank-online.com
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March 18, 2004