More than 500,000 people in Washington who want to open a checking account won't be accepted because they don't know how to manage their finances.
But a partnership between the nonprofit Consumer Counseling Northwest and area financial institutions could change that with a program called "Get Checking."
The program guarantees a bank account for individuals without checking accounts and is helping people enter the financial mainstream.
"We want to make sure we give people a chance to get a checking or savings account so they can learn to be financially responsible with the right tools," said Sam Qureshi, program manager, for Consumer Counseling Northwest.
Qureshi estimates that in Washington there are over 500,000 individuals whose applications for checking accounts would most likely be denied.
The counseling center provides help with debt management, housing expenses and reverse mortgages.
"We are all about helping people to make sure they have a better financial future," he said.
The Get Checking program began in 1998 as a local grassroots effort in Milwaukee, Wis. In 2001, eFunds joined as a national partner to coordinate the program and make it available in multiple markets. Sterling Savings Bank picked up the program in the Spokane area two years ago.
Consumer Counseling provides the training and certification that guarantees checking and savings accounts to those who, for various reasons, are listed in "ChexSystems," a national banking industry tool that tracks the misuse of checking accounts.
More than 16 million consumers are listed in ChexSystems, and 650,000 people are being added to the system monthly. Being listed in the ChexSystems often results in negative responses to requests for new checking accounts. Check-cashing, payday loans, money orders, money transfers and pre-paid cards are estimated to earn $10 billion annually in fees from the unbanked. About 30 percent of those listed are middle class, have advanced degrees and earn over $50,000 in income.
Those enrolled in Get Checking must pay off their outstanding balances before they can be eligible for a bank account, Qureshi said. The average outstanding balance of the counseling center's participants is around $100, he added.
People with closed and mismanaged checking accounts can enroll in the Get Checking training and learn the fundamentals of checking account management. Get Checking teaches participants how to avoid past mistakes and how to make restitution on outstanding balances. The one-time, six-hour course can be divided into two sessions and provides participants the opportunity for financial independence and an understanding of the benefits of financial responsibility.
A fee of $40 for individuals and $60 for couples is charged. Classes are scheduled every month at various locations in different counties.
After training is completed, the Get Checking participant receives a certificate to take to the financial institution where a new checking or savings account will be opened.
At the end of one year, financial institutions are finding Get Checking graduates perform with a higher level of financial responsibility than randomly opened account holders, Qureshi said.
By re-establishing relationships with banks and credit unions, individuals avoid high-priced check-cashing outlets, obtain bank-issued credit and debit cards and have access to market-rate loans for cars and homes. Employees also experience lower costs by being able to make direct deposits of paychecks to employee checking accounts.
Nationally, Get Checking has partnered with 202 financial institutions, with total of 4,400 branches. Of the 15,808 Get Checking graduates, 84 percent have been ChexSystems clients. A year after graduation, 98 percent of Get Checking participants opened an account, and 96 percent retained the account.
Locally, 19 people have graduated from the Consumer Counseling Northwest's Get Checking program in the Puget Sound area.
Consumer Counseling has Get Checking partnerships with Spokane-based Sterling Savings Bank and Tacoma-based Harborstone Credit Union and is actively seeking participation by more financial institutions. Current participants in the Get Checking program in Washington include: American West, Banner, Community First, F & M, Sound Community and Washington Trust banks, Intermountain Community Bancorp, Harborstone and Spokane Teachers credit unions, Sherwood Building and Wells Fargo.
For more information, call Consumer Counseling Northwest at 800-244-1183; 888-65-CHECK or visit www.getcheckingnorthwest.com.