Banks embrace checking reprieve: Growing program frees potential customers

October 31, 2005

Banks and credit unions statewide will soon have a larger pool of customers to tap into when a central Indiana program that helps people barred from opening checking accounts expands.

Get Checking, a national program that began at the University of Wisconsin-Milwaukee in 2001, is a way for people who have landed on the ChexSystem register-a list of consumers barred from opening an account-to get off the list.

People find themselves in ChexSystem due to bouncing too many checks, failing to pay outstanding fees, or committing some other financial transgression to which the bank responds by closing the account.

To get off the list, individuals pay $40 for a six-hour class-$60 for couples-that teaches them about money management. At the end of the class, participants receive a certificate and, once any restitution is paid, are allowed to open a checking account at a participating financial institution.

Individuals whose accounts were closed due to fraud are not eligible.

More often than not, individuals who land on the ChexSystem list aren't the criminal type, said Rebecca Haynes, the program's Indiana coordinator and a Purdue Extension educator.

"There's not a stereotype you can put your finger on regarding these people," Haynes said. "Some have simply mismanaged their accounts or gotten divorced and found the [ex-spouse] has done damage to the account."

The program, originally offered in Marion and Johnson counties in 2003 through the Purdue University Cooperative Extension Service program, is now expanding statewide.

Haynes and others involved in the program anticipate adding to the list of 13 participating banks and credit unions, but some have declined to participate because they don't think such customers are worth the risk.

"Banks have told me, '[We] don't want that kind of audience,'" Haynes said. "Banks are competitive. But they need to understand these are not deadbeat people."

Some banks, which are asked to make a one-time donation ranging from $750 to as much as several thousand dollars depending on their geographic range, choose not to participate for several reasons, said Melanie Trausch, program director for the national Get Checking program.

Many already have a program in place they feel is similar, Trausch said. Some banks or credit unions offer "secondchance checking" services to people who have cleared up mistakes enough to get off the ChexSystem list.

But these checking services typically come with higher fees and more restrictions than an account available to someone who has never been on the list, Trausch said.

"ChexSystem is to financial institutions what the credit bureau is to lenders," Haynes said.

So even after a person does what it takes to get off the register, banks and credit unions can use the information to charge penalty-like fees, similar to higher interest a credit card company might charge to someone deemed a higher credit risk, Trausch said.

Participating Get Checking financial institutions provide the same checking accounts to certificate holders they do to the rest of their customers.

And the program that is growing in Indiana has grown nationally as well.

Wisconsin and California participated in the Get Checking pilot program about four years ago. By 2002, financial institutions in seven states were participating with educational partners in each. By the end of that year, nearly 1,500 new accounts were opened as a result of certificates' being earned.

In 2003, Oregon joined Indiana in coming on board and another 1,800 people completed the program and opened accounts. And, as of last month, about 200 financial institutions in 21 states that participate in the program have gained nearly 9,000 customers.

In just the Indianapolis area last year, slightly more than 700 people earned the Get Checking certificate.

Cincinnati-based Fifth Third Bank, with 80 branches in Indiana, has so far gained 170 customers since it joined the program in December 2003.

The bank joined to give consumers a second chance, said Schiela Pena, a district manager. Fifth Third officials don't think there's a risk in participating, she said.

"There's a great misconception out there that everyone on ChexSystem is a lessthan-favorable candidate," she said. "But through our own research, we know many are professionals-they're just victims of divorce or a major circumstance. Any one of us could end up on ChexSystem if our financial circumstances changed."

In addition to gaining 170 customers, Fifth Third has also referred 300 people to the program. Many people never know they've landed on the list until they walk into a bank and find out when the manager informs them of their situation.

Forum Credit Union, which does not track the number of new account holders it gains from the system, also joined the program to help people get back on stable financial footing.

"We're giving them a chance to fix something from the past," said Kim Peace, assistant vice president of business and member development for the Fishers-based credit union. "The goal is to educate the participant."

That seems to be the sentiment of all those that participate in Indiana's program.

"The program allows individuals a second opportunity to utilize banking services while rectifying past mistakes," said Ann Sumner, community reinvestment officer at Cleveland-based National City Bank.

The program, which is also available to educate people before they end up on ChexSystem, is a good tool for students who don't always balance their checkbooks, Sumner said.

"The program has given us more of a customer base," she said.

The program will go statewide by Jan. 1.

Information about dates and locations where classes are taught and the financial institutions that participate is available at (877) 656-0007 or on the Web at www.ces.purdue.edu/getchecking/.
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