Financial inclusion travels to Texas, East Coast

Consumer Action, with a grant from the Rose Foundation and support from our own Money Management Project, earlier this year created a new financial education training module. The materials are designed to help unbanked and underbanked consumers learn how to use mainstream financial products and avoid high-cost fringe, or alternative, financial products.

After the California debut of the program, Consumer Action trainers Linda Williams and Nelson Santiago headed to Austin, TX, Rockville, MD and Washington, DC, where they introduced participants to the new Checking and Savings Accounts—A Wise Choice.

Sessions also were held on engaging the adult learner and on new consumer protections and resources related to mainstream and alternative financial services.

"What do we mean by financial mainstream?" asked Santiago. "What kinds of institutions are we encouraging consumers to establish relationships with?" The answer, “banks and credit unions,” while simple, becomes quite complex when one delves deeper. “There’s a lot to know about services at banks and credit unions,” he said, suggesting information and resources that participants could use to educate clients about the accounts and services available at large national banks, regional banks, community banks, virtual banks, credit unions and brokerage firms.

Throughout his presentation, Santiago made use of a handy reference sheet (click here to download) listing the resources. For example, he provided links to a community bank locator tool, a high-interest checking account locator and a bank customer satisfaction survey. When he spoke about sending money overseas (international remittances), Santiago named several tools, including Consumer Action's recently updated How to Send Money Home brochure and the Consumer Financial Protection Bureau's remittance fact sheet for stakeholders.

During the discussion of alternative financial services, Santiago focused on transaction-based alternative products and services, including check cashing, money orders, bill payment services, remittances and prepaid cards. Credit-based alternative products, such as payday loans, auto title loans and tax refund related products, were covered by Williams.

Check-cashing services are very costly, said Santiago. He shared examples showing how a consumer earning $1,000 every two weeks and paying 3% to cash a paycheck will end up paying close to $800 per year just for check cashing. A consumer earning half as much would pay almost $400 per year. He pointed out that even a bank account with a fee of $10 per month would be much cheaper at $120 per year. With a bit of persistence, he said, consumers should be able to find low- or no-cost bank accounts.

Santiago emphasized that if consumers are not able to open accounts, for example because of negative information on file with ChexSystems, they could look for affordable alternative products. For example, rather than paying $7 to pay a cable bill through a bill-pay service, an unbanked consumer would be better off using a low-cost money order from the post office. Even banked consumers sometimes are required by a landlord or creditor to pay a bill with a money order. Unless that consumer's bank offers free or low-cost money orders or cashier's checks, a postal or other low-cost money order is the best option.

During the segment introducing the Checking and Savings Accounts—A Wise Choice module, co-trainer Williams spent some time reviewing the lesson plan's exercises and activities. These include a five-page sample ChexSystems report and a hypothetical scenario about a couple that needs advice on reducing bank expenses. The lesson also includes a check-writing exercise and checkbook register activity that Santiago enlarged to poster size so that participants could work on it in teams and compete for prizes.

Early in the training, Williams demonstrated how participants can use a simple true-false pre-training quiz to engage clients in financial education workshops. She posed quiz questions to participants and asked them to work in teams to arrive at their answers. The team with the most correct answers won prizes.

The training also provided an opportunity to showcase several additional Consumer Action publications, including those that focus on prepaid cards, popular as bank account alternatives. Participants were reminded of Consumer Action’s Prepaid Cards booklet and Prepaid Card Survey which, while issued in 2012, contains up-to-date information related to consumer rights in the event of unauthorized card use or disputes with the issuer.

Consumer Action's new Employee's Guide to Payroll Cards was included in participants' packets. Santiago went over some highlights: Employers must offer at least one additional option besides payroll card for receiving wages, such as direct deposit to a bank account; consumers can access their full wages for free at least once per pay period; and protections in the event of unauthorized use are the same as those that apply to bank account debit cards. Participants' reference sheets also included a link to the Consumer Financial Protection Bureau's bulletin warning employers against the exclusive use of payroll cards.

The Maryland training was co-hosted by the City of Rockville. Mayor Bridget Donnell Newton said that one of her goals for the training was to provide local trainers with tools to help families in Rockville’s communities. “Through the development of additional trainers we will be able to reach significantly more individuals and families,” she said.

Community-based organizations around the country can access the Checking and Savings Accounts—A Wise Choice module by clicking here.