The U.S. Department of the Treasury has announced that it will launch a new pilot program that will give unbanked and underbanked Americans access to safe, low-cost financial accounts.
“Far too often, unbanked and underbanked Americans are forced to turn to high-cost alternative financial products – such as check-cashing and other services – that take a big bite out of the savings of those who can least afford it,” said Michael S. Barr, Assistant Treasury Secretary for Financial Institutions. “For many individuals, a tax refund is the single largest payment that they will receive each year. That’s why tax season is a great opportunity to deliver safe, low-cost financial products to the unbanked and underbanked that will help those Americans build stronger foundations for their financial futures.”
The program will reach out to eligible taxpayers via mail and payroll in the private sector. Individuals who have received paper tax refund checks in the past will receive offers for the new accounts and select private sector companies while be asked to include information on the program in their pay slips given to workers.
An estimated 26 million Americans either do not have bank accounts or have accounts that have high fees and fail to meet their needs, leaving them dependent on checking cashing services. This demographic could greatly benefit from this program all year around but especially during tax season when many unbanked Americans who need their tax refunds as soon as possible choose tax refund loans for easy access. If these individual have access to low-cost bank accounts they may forgo expensive tax refund loan services.