What you need to know about mainstream banking services and fintechs, and why you should ultimately consider joining a Credit Union.
Formerly incarcerated individuals face significant challenges when it comes to accessing mainstream banking services. Limited access can have a huge impact on economic wellbeing and the ability to achieve sustainable financial independence.
More than 600,000 people, the majority of whom are people of color and women, are released from our prison systems every year and attempt to rebuild their lives.
While there is increasing support from government and community-based organizations for housing and employment, when it comes to affordable financial services, many people hit a roadblock. Formerly incarcerated individuals frequently encounter a financial system that doesn’t welcome them back into the mainstream, often forcing them to use check cashers, payday lenders and other high-cost, non-bank options. They have difficulty opening a checking account, have often had their identity stolen and find it nearly impossible to get a loan.
But the news isn't all bad. There are several options for justice-involved individuals in today's market. Being an educated consumer with a better understanding of each of these providers -- and their advantages and disadvantages -- can help you decide which option may be best for you.
Financial Services for Justice-Involved Individuals
Second Chance Banking Programs. Second chance checking may be an option if you've been denied for an account due to a negative banking history. Consumers can access these programs through financial institutions located in all 50 states. However, because of the higher risk, the terms and conditions may be less attractive than accounts available to general consumers. Many financial institutions impose service charges or have minimum balance requirements and other account restrictions.
On a brighter note, a number of credit unions and banks have started offering more affordable products aimed at helping unbanked communities. The Cities for Financial Empowerment Fund's national Bank On platform supports financial institution efforts to connect these consumers to safe, affordable bank accounts. As a great example of one of these initiatives, several large credit unions have recently come together to offer Dora Everyday Checking, a Bankon certified, all digital experience, with fee-free checking, early payday, direct deposit, mobile deposit, and access to a network of 30,000 surcharge-free ATMs.
For the rest of the story, visit First Step Alliance here.
Author: Mike Lawson
Married to a most gorgeous and wonderful wife, raising 5 kiddos (including twins!), enjoy helping others tell their stories, and love surfing SoCal waves. Keep it simple.