By Madina Toure
For New Yorkers who have been relying on check-cashing services as an alternative to bank accounts, the city Department of Consumer Affairs has partnered with financial institutions to offer an affordable bank account.
The product, known as the New York City SafeStart Account, has no upfront fees, no overdraft fee and accepts a minimum balance of $25. The agency has partnered with 11 institutions, including Carver Federal Savings Bank, Popular Community Bank and TD Bank, where people can access the account.
New Yorkers in two unbanked neighborhoods, Melrose in the Bronx and Jamaica, spent about $19 million per year in check cashing fees, according to a 2008 study conducted by DCA’s Office of Financial Empowerment. New Yorkers across the city spend $225 million in check-cashing fees each year.
Individuals can open a SafeStart account at participating bank and credit union branches throughout the city or schedule a free one-on-one financial counseling session at one of the city’s financial empowerment centers to learn about opening an account.
“If a consumer tried on their own to go into the bank and negotiate this, they wouldn’t be able to, so that’s why this was great that the city negotiated this product for consumers,” DCA Commissioner Julie Menin said in an interview at the TimesLedger offices last week.
Several years ago, the agency issued a request for proposals to financial institutions in order to get individuals into bank accounts and away from check-cashing services, Menin said.
Out of 825,000 New Yorkers who currently do not have bank accounts, roughly half used to have accounts, she said. Check-cashing services charge $500 or $1,000 per year.
She also noted the agency’s recently launched $3 million outreach campaign centered on the Earned Income Tax Credit program.
The campaign consists of advertisements in buses, subways and newspapers throughout the city and the agency’s first-ever phone-a-thon, in which 2,000 volunteers called 100,000 New Yorkers eligible for EITC based on micro-targeted data obtained from other city agencies. There are currently 200 sites around the city where people can get their taxes done for free.
Individuals who make about $18,000 or less and families that have a combined income of $52,400 or less are eligible for the program, Menin explained. Tax refunds are anywhere from $2,500 to $10,000.
“We know that one in five New Yorkers who are eligible for the earned income tax credit simply are not taking it,” Menin said. “That’s 250,000 New Yorkers who are eligible for EITC and are just leaving it on the table. And we’re talking about real money.”
DCA secured more than $3.3 million in money for consumers in the first six months of the fiscal year, an 85 percent increase from last year. The agency received 406 complaints, 242 claiming to have not received the Notice of Employee Rights, 166 saying they were not paid for sick time and 77 claiming retaliation for using sick leave. So far, DCA has mediated or is in the process of mediating the majority of the complaints.
It has also issued subpoenas to 200 used car dealers and reached a settlement calling on the National Credit Adjusters, a debt collection agency that collected on illegal payday loans from New Yorkers, to pay $962,800 in restitution to more than 4,600 New Yorkers.
Reach reporter Madina Toure by e-mail at mtour
