Seventeen people in Rhode Island opened a total of 27 checking and savings accounts to deposit tax refunds during the 2014 tax season through an award-winning pilot program run by the nonprofit Capital Good Fund in Providence.
The three financial institutions selected through requests for proposals to participate in this “Facilitated Account Opening” program were People’s Credit Union of Middletown, Navigant Credit Union of Smithfield and RBS Citizens Financial Group of Providence.
Each financial institution used a slightly different method to enable would-be customers who were filing their tax returns at a Volunteer Income Tax Assistance office to also initiate account openings while there, instead of going to the bank or credit union to do it. The partnership with VITA enables identity verification to be done both for the IRS and the financial institutions, said Libby Kimzey, senior vice president of coaching and systems for the Capital Good Fund.
While the numbers are not high, fund founder and Executive Director Andy Posner says they’re significant when aiming, as his organization does, to boost financial literacy not only for those low-income citizens who do not have access to bank accounts, but for those who do have accounts, but because of finances and other pressures may not be used to depositing and saving a tax refund.
These citizens are referred to as “unbanked” and “under-banked,” respectively. According to a 2011 national survey of unbanked and under-banked households conducted by the Federal Deposit Insurance Corp., Posner said, Rhode Island has the highest of rate of unbanked households in the country at 7 percent of the total population, while 17.8 percent of Rhode Islanders are under-banked.
“In Rhode Island, the problem is people being under-banked,” he said. “They typically have an account but don’t use it effectively. They might go to a check casher to get the money quickly [instead of saving it]. But having this [program] available gave us the opportunity to talk to people about their existing bank accounts” and encourage them to make deposits.
Shariff Njie, 40, of Providence, told Providence Business News he has deposited a $2,500 refund into new accounts at Navigant. Now working as a driver for Omega Solutions of Seekonk, Njie had been laid off for almost six months from a previous job. As a result, his account with a different financial institution had been closed.