Savings

When the Financial Fringe Takes a Bite Out of Savings

March 19, 2012
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The New York Times ran a piece over the weekend that highlights many of the challenges of the alternative banking sector. As the article explains, low-income consumers may turn to “fringe financial companies — businesses like check cashers, payday lenders and pawnshops that lack conventional checking or savings accounts and frequently charge huge fees and high interest for their services” because they are the only places that these people can get the services they need. As Anne Stuhldreher, a Senior Policy Fellow with New America in California explains in the article, “Without a checking or savings account, you’re basically shut out of most affordable financial services.” Without affordable products, savings opportunities are highly limited and more fundamental opportunities for asset preservation are at risk.

GUEST POST: New Database Provides Economic Security Data for Families Across the Country

March 19, 2012
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Matt Unrath is the Director of the National Family Economic Security Program at Wider Opportunities for Women.

Asset Building News Week, Mar 12-16

March 16, 2012
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The Asset Building News Week is a weekly Friday feature on the The Ladder, the Asset Building Program blog, designed to help readers keep up with news and developments in the asset building field. This week's topics include young adult unemployment, student loan debt, banking products, asset building at tax time, and the racial wealth gap.

"We Don't Do Banks"

  • By
  • Rourke OBrien,
  • New America Foundation
March 15, 2012

When asked whether he or anyone in his household has a bank account, Billy, a 24-year-old out-of-work father of two young daughters quickly retorted, “We don’t do banks.” A recent survey by the Federal Deposit Insurance Corporation (FDIC) reveals that Billy is not alone—more than 9 million American households are unbanked, meaning they have no checking or savings account.

Pay No Attention to the Facts Behind the Curtain...

March 14, 2012
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The Supplemental Nutrition Assistance Program (“SNAP”) has become a major target this election cycle, largely because of persistent accusations of waste and fraud in its administration. However, it is well documented that SNAP fraud is minimal; furthermore, there is a logical disconnect between the problems defined and the expensive solutions proposed in the name of “efficiency."

The Economic Research Service of the USDA just released a new publication on its website documenting the reasons that participation in SNAP has risen so significantly over the past few years. Unsurprisingly, high rates of unemployment since the recession began are largely to blame; ERS research has shown that since 1980, a 1-percentage-point increase in the national unemployment rate is associated with about 1 to 3 million additional SNAP participants. Another factor is that some of the most burdensome policies put in place by welfare reform—which caused the SNAP caseload to decline 47% between 1996 and 2000—have been lifted or eased over the past decade. Additionally, though participation is up, the average SNAP benefit remains low, even with the Recovery Act boost. In 2010, the average 2.2-person SNAP household had a monthly gross income of $731, net income of $336, and a SNAP benefit of $287.

Cracking Down on Payday Lending at the State and Federal Level

March 14, 2012
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As I mentioned in last Friday’s news round up, Petula Dvorak at the Washington Post detailed the story of a man who used a series of payday loans to cover his Christmas expenses –with near disastrous consequences to his family’s long term financial health. After spending $1,500 on the holidays, he used a payday loan to cover his mortgage—but quickly needed another loan to cover the cost of the first—lather, rinse, and repeat. By the end of the piece, he is drinking lemonade forlornly, describing the way his boss helped him avoid paying thousands of dollars in interest and “loan-renewal option” fees. Unfortunately, for many Americans, these stories are not confined to the holiday season (nor do they involve a stroke of luck from a sympathetic employer).

Testimony of David Rothstein to Senate Committee on Banking, Housing, Urban Affairs

March 15, 2012

Chairman Brown, Ranking Member Corker, and Members of the Subcommittee, thank you for giving me the opportunity to testify on behalf of Policy Matters Ohio and the New America Foundation. Policy Matters is a nonprofit, nonpartisan research institute that focuses on issues impacting low- and moderate-income working families.

Asset Building News Week, Mar 5-9

March 9, 2012
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The Asset Building News Week is a weekly Friday feature on the The Ladder, the Asset Building Program blog, designed to help readers keep up with news and developments in the asset building field. This week's topics include unemployment, inequality, education, and homeownership.

The Safety Maze: Inconsistent and Unpredictable Rules in the Public Benefits System

March 8, 2012
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Last week at the National Anti-Hunger Policy Conference, I attended a roundtable about SNAP outreach to veterans and military families. Over the past few years, SNAP sales at commissaries have grown considerably. At the same time, the 2008 Farm Bill permanently excluded combat pay from service members’ countable income for SNAP purposes. It’s clear that there is growing recognition that military members and their families are vulnerable to hunger. Nevertheless, certain policies serve as barriers to access by this population—specifically, the allocation of the Base Allowance for Housing (“BAH”) to income. And in many ways, the policy is emblematic of larger gaps in equity and transparency in the public benefits system. 

Building a Comprehensive Asset Building Strategy at Tax Time and Year Round

March 7, 2012
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Our friends over at the Half in Ten Campaign have a new piece up about the impact the Earned Income Tax Credit (EITC) has on families’ financial security. Desmond Brown chronicles the rising support for financial empowerment initiatives among antipoverty activists and makes a strong case for a comprehensive approach to helping low-income families utilize opportunities like receipt of the EITC to the fullest. Since the EITC can be the single largest income boost a family gets during the year, the asset building community has long recognized the potential for tax preparation and filing to serve as a direct path to greater financial stability for people with low-incomes.

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