Massachusetts Office of Consumer Affairs and Business Regulation Holds “Bank On It” Event
2012 Check Cashers Report Finds Consumers Save Money with Bank Accounts
BOSTON – The Office of Consumer Affairs and Business Regulation and the Division of Banks today released the results of their 2012 Check Casher Report during its Bank On It event held at the Codman Square Technology Center in partnership with DotWell, a comprehensive community center serving the residents of Dorchester and nearby communities.
The survey examined costs to cash checks at licensed check cashers in Massachusetts and compared these costs to those charged by state and nationally chartered banks that offer a Basic Checking Account, or an alternative low-cost checking or savings account option.
“Check cashing fees can really make a dent in a consumer’s budget,” said Undersecretary of Consumer Affairs and Business Regulation Barbara Anthony. “Our survey shows the advantages of having a bank account, with actual cash savings and the cultivation of a valuable relationship with a bank that impacts the entire neighborhood. Community groups like DotWell are instrumental in providing consumers with the tools necessary to build and maintain their own financial stability.”
According to the survey, the cost of a Basic Banking account at many Massachusetts banks remains consistent, at a maximum of $3 per month, equal to $36 annually. Consumers who cashed one personal check worth over $1,000 using a check cashing service would have paid more in fees than they would have for an entire year of Basic Banking. For the average consumer, switching from a check cashing service to a bank account would save approximately $1,200 annually.
The Division of Banks conducts check casher reports to examine the fees associated with non-traditional banking products. Check cashing services have been regulated by the Division of Banks since a 1994 law requiring any person or entity charging more than $1 for such a service to be licensed. The Division currently licenses 62 check cashing companies operating at a total of 155 locations around the state.
The 2012 Check Cashers Report analyzes the costs of utilizing a check cashing service and compares this to the cost of using a Basic Banking account, illustrating a consistent cost savings when using a bank account. Check cashers charge fees based on the size and type of the check. Payroll checks consistently resulted in the lowest fee at 2.05% for checks ranging from $100 - $500, and up to 2.73% for checks less than $100. Personal checks universally carried the highest fees, with a charge of 4.75% for checks less than $100, 4.42% for checks $100 - $500, 4.31% for checks $500 - $1,000, and 4.37% for checks over $1,000. The 2010 report found that annual check-casher fees ranged from $139 to $1,424.
“Through our Bank On It program we want to show consumers how simply and inexpensively they can enjoy the benefits of banking here in Massachusetts,” said David Cotney, Commissioner of Banks. “We want to see all Massachusetts consumers minimize the fees they pay in order to manage their finances. Banking is the best way.”
The results of the 2012 Check Casher Report were announced at the Bank On It event held today at DotWell. Bank On It is a Consumer Affairs program designed to teach consumers about low- and no-cost banking options for Massachusetts residents. Specifically, it teaches Massachusetts consumers about the advantages of using a bank account to manage their finances and how to find cost-effective options for opening one. Massachusetts consumers under the age of 18 or over the age of 65 are eligible for an 18/65 account , a free checking account with no minimum balance, no charges for withdrawals and deposits, and free checks. All Massachusetts residents are also eligible for Basic Banking accounts, offered at over 125 banks throughout the state. These accounts require no more than $25 to open, provide at least 15 free withdrawals a month, and have a maximum monthly fee of $3.
“Community health centers were created over 45 years ago with the mission of reducing health disparities by facilitating access to quality care regardless of ability to pay,” said Sandra Cotterell, CEO of Codman Square Health Center and the Co-CEO of DotWell. “In order to improve health outcomes we also need to address all the factors outside the exam room that impact wellbeing including a person’s financial health.”
“The staff at our health centers has worked with patients to develop individual fiscal health plans, which includes helping them establish bank accounts,” said Walter Ramos, President and CEO of the Dorchester House Multi-Service Center and the Co-CEO of DotWell. “These strategies improve financial security for our patients and also reduce stress and uncertainty that can arise during a health crisis.”
Bank On It also warns of the dangers and fees that can be associated with alternative financial services, such as payday lenders and prepaid cards. Payday lenders often use predatory advertising tactics to lure in consumers who are quickly hit with often exorbitant interest rates. Prepaid cards offer unbanked consumers an alternative to traditional debit cards, however they often have numerous fees, and many are not insured by the Federal Deposit Insurance Corporation.
“The patients I work with think bank accounts are out of their reach,” said Jametta Cooley, a prenatal case manager at Dorchester House. “My colleagues and I explain the benefits of being banked and that there are free checking and savings accounts at many banks. This is a first step towards financial stability by avoiding the high fees associated with check cashing operations. By opening a bank account, our patients are now able to access secure loan products for a car or college and establish credit. This simple step helps to create security on a personal level.”
The Office of Consumer Affairs and Business Regulation is committed to protecting consumers through advocacy and education, and also works to ensure that the businesses its agencies regulate treat all Massachusetts consumers fairly. Follow the Office at its blog, on Facebook and on Twitter @Mass_Consumer.