1. FDIC SAFE BANKING TEMPLATES
Jean Ann Fox Director of Financial Services Consumer Federation of America

2. Unbanked and Underbanked Consumers
9 million US Households are unbanked (17 million adults)
17.9% are underbanked (43 million adults)
Total: Over a quarter of US HHs (60 million adults)
Minorities more likely to be unbanked/underbanked
Low Income
Single Head of Household
Less than high school diploma
Younger
Southerners
Source: FDIC National Survey of Unbanked and Underbanked Households, December 2009

3. Barriers to Bank Account Ownership
Don’t feel they have enough money to need one (FDIC)
Cost of overdrafts
Uncertainty of fees and expenses for account
Disputes related to recordkeeping
Difficulty in getting problems solved
Source: Study of the Unbanked & Underbanked Consumer in the Tenth Federal Reserve District, Federal Reserve Bank of Kansas City
Paid in cash (more likely to be banked if paid by direct deposit or checks)
Bank not conveniently located
Source: Pew Trusts, “Unbanked by Choice.”

4. Why Bank Account Ownership is a Good Thing
Avoid steep fees for check cashing, bill payment
Higher savings rate
Safety of funds in insured account
Benefit from speed of direct deposit of wages, tax refunds, federal benefits – Treasury going paperless
Get protections of the Electronic Fund Transfer Act for liability limits on debit transactions, dispute rights, control over making payments electronically
Less risk of theft, fraud loss inherent to cash
Ticket to financial mainstream

5. And the downside of being banked
Eligible to use payday loans and deposit cash advance loans from some banks
Steep fees for bounced checks and overdrafts
Aggressive marketing to opt in to debit overdraft fees
Holds on deposited checks
Escalating fees, higher minimum balances to avoid fees make accounts expensive for LMI consumers
May not offer convenient money transmitter services
Checks not accepted by some landlords
Money orders may be expensive

6. AFS Products Used by Unbanked and (Underbanked)
66% use one or more transaction or credit products
54% buy money orders (81% of underbanked)
38% paid for non-bank check cashing (30% underbanked)
12% use prepaid debit card, 3% use payroll card
6.6% use payday loans (11.4% of previously banked and 16% of underbanked)
14% use pawn shops (15.8% of underbanked)
11.9% use rent-to-own (13% underbanked)
7.8% use refund anticipation loans (13% underbanked)
Source: FDIC Unbanked/Underbanked Study

7. FDIC Model Safe Accounts Template
Features for transactional account
Card-based electronic account
No overdraft or NSF fees
Free direct deposit
Free automatic savings feature
Free online and mobile banking and bill pay
Free electronic statements, with customer consent
Opening balance $10 to $25
Monthly minimum balance $1
Monthly maintenance fee up to $3
2 free money orders per month, additional for reasonable fee
Check cashing free on-us check, reasonable fee
Funds available same or next day with exceptions

8. Basic Savings Account Features Card-based electronic account
Interest bearing
Free direct deposit
Free automatic savings feature
Free online and mobile banking/bill pay
Free electronic statements, with customer consent
$5 opening balance
$5 minimum monthly balance
No monthly maintenance fee if minimum balance is met
Free check cashing if on-us check, reasonable fee
Funds availability same day or next day from established cust.

9. Auxiliary Services and Fees
Financial education free
Reasonable and proportional fees for:
Linked savings account
Line of credit
Kiosk bill payment
Domestic and international wire transfers
Loans up to $2,500 meet FDIC’s Safe, Affordable, and Feasible Template for Small-Dollar Loans

10. Pilot Banks and Areas Bath Savings Institution, Maine
Citibank, NYC with Grameen America
Cross Country Federal Savings Bank, New York
First State Bank, Tennessee
ING DIRECT, in four areas (Baltimore, Atlanta, Philadelphia/Camden/Wilmington, Seattle/Tacoma)
Liberty Bank and Trust Co., New Orleans, LA
Pinnacle Bank, Nebraska, Kansas, Missouri
South Central Bank, Kentucky
Webster Five Cents Savings Bank, MA