Overdraft fees add up to $36 burgers?!
Lydia is a returning citizen, recently out of incarceration and completing community service with a local nonprofit she likes. She knew her money was tight but thought she had enough to budget a $1 lunch each day from the value menu across from where she was volunteering. Each day, she went, swiped her card without any apparent issue, and ate her sandwich. It wasn’t until weeks later she learned the real cost. At some point, her checking account hit empty and those $1 burgers had cost her $35 each in overdraft fees. Lydia, who was already on the financial edge, was now hundreds of dollars down from surprise fees.
Stories like this are incredibly common, impacting those who can least afford it and pushing Burqueños out of the financial mainstream. Around 43% of vulnerable households reported overdraft fees, with an average of 10 overdrafts per year. But thanks to the Bank On Burque initiative launched last June by the city of Albuquerque and our eight partnering financial institutions, every Albuquerque resident can access a safe, low-cost, no overdraft fees checking account.
New Mexico has the second-highest rate of unbanked households in the nation at over 11%. It’s a statistic that comes up less often than other economic measures in our state, but it is a metric absolutely worth tracking and improving if we are concerned with building family financial security in our communities.
Bank accounts are the first step to protecting and managing your money, connecting individuals to tools that can help them build credit, save and get approved for reasonable loans. Without a bank or credit union, folks often rely on predatory lenders and check-cashing services that can take anywhere from 3% to 15% of their paychecks up front. We all work too hard for our money to give up that much, but that’s the cost of doing business without a bank account.
There are many reasons for our high level of unbanked and under-banked residents. It may be generational distrust in financial institutions, a lack of financial capacity-building opportunities, or bad experiences with debt and lending. However, we also know that a full 50% of unbanked individuals did have an account at one time but have left them, citing high and unpredictable fees as one of the top reasons.
Folks need a safe way in – or back in – to banking with an account they can trust. That’s exactly why we’ve worked with our financial institution partners including Bank of America, Chase, First Convenience Bank, Nusenda Credit Union, Rio Grande Credit Union, US Bank, U.S. Eagle Federal Credit Union and Wells Fargo to launch Bank On Burque.
As our state and our city strive to create new economic opportunities for New Mexico families, we must also create tools that can help folks on their way to financial stability. Bank On Burque’s launch complements other key financial empowerment city programs like those offered by the Office of Consumer Protection, a resource for those taken advantage of by unfair business practices.
April is financial literacy month, and we could all be making smarter money moves. If you don’t currently have a checking account, take this first step to building and protecting your wealth and a look at the benefits of a Bank On Certified Account and the branches where they are offered at cabq.gov. If you already have an account that you’re happy with, help us get the word out about this new program to the one in 10 New Mexicans without a checking account.