It’s estimated 1 in 5 Illinois households don’t use banks, mainly because they can’t meet the requirements of start-up costs and minimum deposits. So they turn to payday loan operations, even for basic services like cashing a paycheck.
The result can be high fees and interest rates.
Illinois Comptroller Susana Mendoza said a new state law, signed Monday, will ask banks and credit unions to list what they offer in the way of low cost methods for opening an account.
“We’ll set up a window on our website where people can enter their address and we’ll say here’s the nearest bank to you with an appropriate account that will work for you,” Mendoza said.
Mendoza adds that giving more people access to low cost banking will help them avoid the cycle of bad credit that prevents them from being able to save and invest.
Democratic Senator Christina Castro of Elgin, one of the sponsors, said lack of access to traditional banking can prove costly.
“A study performed in 2008 found an average full time worker who does not have access to traditional banking sacrifices over $40,000 over the course of their lifetime to banking fees,” she said.