After learning that one in seven New Haven households used check-cashing services rather than bank accounts, Connecticut Senator Chris Murphy is requesting a New Haven financial literacy program.
In a letter to the Consumer Finance Protection Bureau, Murphy requested federal resources to implement a program called “Your Money, Your Goals” that would reduce the number of unbanked residents, or residents without a bank account. According to the Brookings Institute, a nonprofit public policy organization based on Washington, D.C. a worker can waste nearly $40,000 in his lifetime on check-cashing fees. Murphy said that this is a “financial burden” given that 26 percent of New Haven residents live below the poverty line.
“We know that thousands of individuals don’t have bank accounts in New Haven and it’s going to cost them tens of thousands of dollars over their lives if they don’t have a greater amount of financial literacy” Murphy said. “I understand a program like this isn’t going to change the world, but I do think that it could be a good resource for New Haven.”
The Consumer Finance and Protection Bureau has already implemented “Your Money, Your Goals” in a number of cities across the country, one of which is Hartford, Conn. The program includes training related to budgeting, credit, debt, choosing financial products and consumer financial protection. For New Haven, the program has the potential to work with existing non-profits to help people get bank accounts.
Many unbanked residents are low-income employees who are new to the country and are unfamiliar with the American banking system. A lot of the times they end up relying on check-chasing services simply because they are unaware of the other options available, or because they do not trust banking institutes.
Sister Mary Ellen Burns of the local nonprofit Apostle Immigrant Services said the financial literacy program should find a way to present banking as a safe and trustworthy option. She added that the program can accomplish this by explaining how institutions like the Federal Deposit Insurance Corporation work.
“I’m sure it would be helpful for people who might not be aware of the options that are open to them here and who might not have had similar systems in their country,” Burns said.
Will Kneerim, a manager at the Integrated Refugee and Immigrant Services in New Haven, also advocated for “Your Money, Your Goals”.
According to Kneerim, even well-educated immigrants are still lacking knowledge of the American financial system. A program like “Your Money, Your Goals” would help smooth their resettlement process.
New Haven workers interviewed had mixed reactions to Murphy’s CFPB request. Downtown Ambassador Troy Smith thinks that a program to promote banking would be a welcome addition to the community. But Smith said that if the program is going to be successful, it will need to be well-marketed to residents. “I would like to see some type of presentation or activity at a local spot somewhere downtown” Smith said.
However, Erasmo Olivar, an employee at a local restaurant, was skeptical about the need for a financial literacy program in New Haven. He viewed check-cashing services as more beneficial to the employee. Though he currently does not have a bank account, Olivar said he was still open to getting one if the switch would save him money.
Murphy has put in the request for the financial literacy program, but has not yet received a response from the CFPB because the bureau is still investigating the resources required.
There are more than 6,000 unbanked households in New Haven.