Treasurer urges shoebox savers to 'Bank on Aurora'

This weekend alone, at least 5,300 Aurora residents will pay a premium just to cash their paychecks.

State Treasurer Alexi Giannoulias was in Aurora Thursday promoting the city's participation in a national campaign aimed at breaking down the barrier between low-income families and banks.

The Bank on Aurora program will help connect qualified "unbanked" households with free or low-cost bank accounts to help residents save hundreds of dollars annually.

According to the Pew Charitable Trusts' Safe Banking Project, roughly 5,300 Aurora households rely on check-cashers, payday lenders and pawn shops to cash their payroll checks at high interest rates. The same project also concluded that the average "unbanked" household in Illinois pays $575 annually to get its own money.

"Not only are families paying high fees when they can least afford them," Giannoulias said, "they are missing out on opportunities to save for emergencies and build wealth. Something as simple as a checking account can be an on-ramp to economic stability."

Area banks will begin marketing the accounts to families in early 2010 with a goal of opening checking accounts for 1,200 household in the first year.

To qualify for an account, residents must have a record free of theft or identity fraud and will be encouraged to enroll in financial literacy training programs.

Giannoulias said he hopes more banks and credit unions use the opportunity to foster potential long-term relationships to new customers.

"A majority of unbanked residents work full or part-time so not all of these accounts are small," he said. "Some actually end up being rather large accounts that you can't believe haven't been saved in a bank."

To participate, banks must offer free or low-cost checking and savings accounts, "second-chance" accounts for people with less than perfect credit histories and accept tax identification numbers and other foreign IDs in place of social security numbers.

"Sure, it may start out as helping these families with an account," he said. "But as that account grows and the customer becomes more familiar with the bank, maybe that account grows into a home loan or vehicle loan."

Mayor Tom Weisner said the program is exactly the kind of "public-private partnerships the city encourages.

"A program that helps people realize that they don't have to pay for their own money through check-cashing and payday loan services is a good one," he said.

Rockford was the first Illinois community to launch a "Bank On" program last week with the goal of registering 1,000 new bank customers. As of Thursday, about 50 bank and credit union branches, and a dozen social service agencies have already begun enrolling residents.