Imagine having to pay your monthly bills without the convenience of a checking account. Most of us use checking accounts to make hundreds of financial transactions every year to pay for everything from basic living expenses to impulse purchases.
Shelby Woodruff found out firsthand how difficult life without a checking account can be when she tried to open an account at an Indianapolis bank. The 21-year-old waitress from Greenwood, Ind., was denied an account. Because of previous overdrafts, her name was added to ChexSystems, a national database of individuals who have mismanaged their accounts.
Woodruff, who moved to the Indianapolis area from St. Joseph, Mich., last October, had unknowingly left a problem behind. Months earlier, an ex-boyfriend had misused her bankcard and racked up several overdraft charges. When Woodruff closed the account, she wasn't aware that she'd been reported to ChexSystems.
Woodruff is not alone. ChexSystems has more than 500,000 records of account abuse, mismanagement and fraud from Hoosiers of all income levels. “ChexSystems is to financial institutions what credit bureaus are to merchants,” says Rebecca Haynes-Bordas, Purdue Extension consumer and family sciences educator in Marion County . “Once a consumer's name is in ChexSystems, it's virtually impossible to open a bank account.”
Starting from scratch
Purdue Extension is helping Hoosiers regain solid financial standing through a money management program called “ Get Checking.” Participants learn the basics of checking account management, including how to select an account, how to use the check register and how to reconcile the register with monthly statements.
Participants must complete six hours of class instruction and pass an exam at the end of the program. Successful completion is noted on an individual's ChexSystems report and is a green light for financial institutions in the program. Participants can take their certificates of completion to one of these banks to open accounts.
Get Checking was offered in Indiana for the first time in September 2003 to fewer than 10 people, but it quickly caught on. By December 2005, more than 1,400 people in central Indiana had successfully completed the program. Classes were jointly taught by Purdue Extension educators Haynes-Bordas and George Okantey in Marion County , Linda Souchon in Johnson County , and other educational partners.
“The classes really covered everything from A to Z,” says Woodruff, who returned to National City Bank to open an account the day after she completed Get Checking. “I didn't realize how much money I was spending. We had to write down the list of what we spend our money on and how much we spend. The little light bulb came on, and I was like, ‘Oh my goodness gracious,'” she says.
In addition to regaining financial footing, participants also realize other savings. Woodruff says she spent from $5 to $10 each month on money orders and cashier's check fees. Her expenses were lower than most. On average, people without a checking account spend 2 to 3 percent of their annual salary on check-cashing and money order fees. This works out to about $1,300 annually for Indiana's median family income of $52,000 per year, according to the Indiana Business Review .
“I don't have a lot of bills, but the ones that I do have are paid on time now. It's so much easier to write checks. It's quick, and I don't have to run to the store to pick up money orders or pay in person,” Woodruff says. “I'm able to manage my schedule better.”