More than 10% of Pittsburgh residents have no bank account and another 19% rely heavily on risky alternative financial tools such as payday loans, check-cashing shops, and rent-to-own arrangements. This represents more than 130,000 households living without financial security. This can make it very difficult to purchase a home, send your children to college, pay utility bills or buy groceries. We must work with social services organizations, financial institutions, and community leaders to open the doors to financial literacy and security.
1. Bank On
Bank On is a program of the National League of Cities that helps cities work collaboratively with financial institutions, community organizations, and residents to remove barriers to financial security and increase financial literacy. Cities across the country have partnered with Bank On to convince banks and credit unions to create no-fee checking accounts for residents, to offer low-interest home improvement loans, and to expand access to savings accounts and other services that would otherwise be out of reach. Bank On programs have been an invaluable resource to new immigrants, low-and-moderate income residents, and residents with poor credit histories by creating a path to the financial mainstream when most financial institutions would turn these people away.
Pittsburgh should create its own Bank On program and join dozens of cities across the country that have created new pathways to financial stability.
2. Removing Barriers to Participation
Many people without bank accounts mistrust financial institutions or feel that their personal finances would preclude them from opening a checking account or savings account. These barriers to participation lead to reliance on risky alternatives like payday lending and check cashing that can end up costing hundreds or thousands of dollars over the long-term. One of the key benefits of Bank On is the ability to remove these barriers through partnerships with financial institutions and create equitable financial services that can help lift people out of poverty or help them achieve their financial goals.
3. Building Financial Literacy
One of the first steps toward financial stability is financial literacy and working collaboratively through the Bank On program, residents would have access to free individual- or classroom-based financial literacy courses. Other cities have leveraged Bank On to create courses ranging from how to write a family budget to how to design a long-term savings plan to how to write a business plan and use it to get a small-business loan.