ST. GEORGE — In an effort to serve those who are either underbanked or unbanked entirely, some local banks are trying various approaches to help people avoid fees that could make an already difficult financial even harder.
According to the Federal Deposit Insurance Corp, an estimated 5% of U.S. households are unbanked, which means that no one in the household has a checking or savings account, and another 11% are underbanked, or lacking sufficient access to mainstream financial services.
Melanie Jordan, senior vice president of retail deposit products for Zions Bank, told St. George News that Washington County averages pretty close to the national averages, with 3.8% of the residents unbanked and 15.5% underbanked.
“People who are unbanked or underbanked wind up relying on more expensive products like check cashing services, payday loans and prepaid debit cards,” Jordan said.
On average, unbanked people spend 5% of their net income on “unnecessary fees for alternative financial services,” Zions Bank said in a press release shared with St. George News.
Even simply cashing a paycheck can come with fees for someone who doesn’t have a bank account. While some banks will cash checks drawn on their accounts for free, others require the payee to be a bank customer.
Retailers such as Walmart or Smith’s Food and Drug will also cash payroll checks for anywhere from $4-$8, but two-party checks are more difficult to cash and come with higher fees. And check cashing services may charge anywhere from 2.5-10% of the total check amount, plus services fees.
Additionally, a study from the University of Virginia reported that unbanked people are more likely to be victims of crime, specifically violent robberies, because they often carry large amounts of money either on their person or have it hidden away in their homes.
In response to the problem, Zion’s Bank launched OnBudget Banking earlier this month, which comes with no minimum balance and no overdraft fees. Jordan said this can help low-income households get over the hurdles that might prevent some from opening an account. OnBudget Banking has a $5 monthly fee and comes with mobile banking and a Visa debit card.
Another local bank, State Bank of Southern Utah, also offers similar incentives for unbanked or underbanked households. The bank’s director of marketing, Tyler Brown, told St. George News that they’re always looking for ways to better serve their clients.
“We stick to the basics,” he said. “We’ve offered free checking accounts, which don’t have any minimum balance or monthly service charges, for many years. Our student checking account is free, and we waive the first two overdraft fees per month.”
Stan Sorensen, chief marketing officer at Altabank, which originally opened in 1905 in Lewiston, Utah, as Lewiston State Bank, said that he and his colleagues have had many conversations about how to help unbanked and underbanked people. Altabank offers some free services but does require a minimum balance.
“Our checking accounts have a $100 minimum balance,” Sorenson said. “With that, clients get free online and mobile banking, as well as online bill pay.”
Sorensen said that Altabank does charge overdraft fees, but they don’t see many on a monthly basis.
Financial advisers recommend consumers do their research on different banks and credit unions to find the best programs that are most suited to their individual needs and financial situations.
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