Lydia is a returned citizen, recently released from incarceration and doing community service with a local nonprofit she loves. She knew her money was tight, but thought she had enough to plan a $1-a-day lunch from the value menu across from where she was volunteering. Every day she went there, swiped her card without apparent problem and ate her sandwich. It wasn’t until weeks later that she learned the true cost. At one point, his checking account was empty and those $1 burgers had cost him $35 each in overdraft fees. Lydia, who was already on the financial edge, now had hundreds of dollars less than the surprise fees.
Stories like this are incredibly common, affecting 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 partner financial institutions, every Albuquerque resident can access a safe, inexpensive checking account with no overdraft fees.
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 metrics in our state, but it’s one that’s absolutely worth tracking and improving on if we care about strengthening the financial security of families in our communities.
Bank accounts are the first step to protecting and managing your money, connecting people to tools that can help them build credit, save, and get approved for sensible loans. Without a bank or credit union, people often rely on predatory lenders and check cashing services that can take between 3% and 15% of their paychecks in advance. We all work too hard for our money to give up so much, but that’s the price of doing business without a bank account.
There are many reasons for our high level of unbanked and underbanked residents. It can be a generational distrust of financial institutions, a lack of financial capacity building opportunities, or bad experiences with debt and lending. However, we also know that 50% of unbanked people had an account at one point but left it, citing high and unpredictable fees as one of the main reasons.
People need a secure way to access – or return to – their banking with an account they can trust. This is exactly why we worked with our partner financial institutions including Bank of America, Chase, First Convenience Bank, Nusenda Credit Union, Rio Grande Credit Union, US Bank, US Eagle Federal Credit Union and Wells Fargo to launch Bank On Burque .
As our state and city strive to create new economic opportunities for New Mexico families, we must also create tools that can help people on the path to financial stability. The launch of Bank On Burque complements other key municipal financial empowerment programs like those offered by the Office of Consumer Protection, a resource for those profiting from unfair business practices.
April is financial literacy month, and we could all make smarter money moves. If you don’t currently have a checking account, take that first step towards building and protecting your wealth and learn about the benefits of a certified bank account and the branches where they are offered on cabq.gov. If you already have an account that’s right for you, help us spread the word about this new program to 1 in 10 new Mexicans without a checking account.