FDIC SAFE BANKING
TEMPLATES
Jean Ann Fox
Director of Financial Services
Consumer Federation of America
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
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.”
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
And the downside of being banked
• Eligible to use payday loans and deposit cash advance
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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
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
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
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.
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
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,
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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