Before the recent birth of Jacqueline Key’s grandchild, the Austin resident said she supported her 10-year-old son and 20-year-old daughter — the newborn’s mother. Now, as the sole caretaker of three dependents, Key sought tips Oct. 20 on how to rebuild her credit and become a homeowner at an event geared to reduce Chicago residents’ dependency on currency exchanges.
Residents like Key, from Austin and other neighborhoods, filed in and out of the Second Chance Banking event, held in a community room at the District 15 Police Department, 5701 W. Madison Ave., by The Monroe Foundation and the Westside Ministers Coalition.
The event featured representatives from PNC Bank, U.S. Bank, Guaranty Bank and financial assistance groups who answered questions about how to rebuild credit scores, open savings or checking accounts with little or no fees, and become homeowners. The program is being held in neighborhoods across the city.
Otis Monroe, CEO of The Monroe Foundation, said his group would give $25 to anyone who opened a bank account at the event. The program is primarily for people who are worried about how their previous failed bank accounts or loans might affect their ability to secure a bank account now.
“Second Chance Banking is for people who tend to use currency exchanges or may have overdrafted previous bank relationships and banks closed those accounts,” Monroe said. “Our goal is to bring them back in to mainstream banking.”
Aside from giving advice to attendees, bank representatives at the event help people set up savings or checking accounts for low minimum balances and maintenance fees — fees that are available to all account holders at these banks.
Guaranty Bank requires a $25 minimum deposit for a checking account and a program called Clear Coverage, which charges a small fee of $7 if a checking account holder overdrafts money, said Tamieca Orr, Lakeshore South area manager for the bank.
PNC Bank offers checking accounts for a $5 monthly maintenance fee, even for individuals with a negative track record with past bank accounts. Applicants must take a financial seminar before setting up the account, can’t have excessive balances or have committed fraud, said Paul A. Labonne, PNC’s VP community consultant.
Monroe said many low-income families tend to rely on cash advance stores — businesses that provide fast cash but at a cost. A payday loan store will give out a small, short-term loan paired with high interest, which Monroe said does not help build credit and can cause families to pay a high price for quick cash.
He added that some banks have high fees for new accounts, which inhibits low-income families from opening a “mainstream” bank account and saving money.
“What (payday loan stores) do is essentially keep the economically challenged individuals and households out of the financial mainstream,” Monroe said. “Currency exchanges have been allowed to thrive and flourish because financial institutions were not allowing services to let struggling families become part of the financial mainstream.”
Stacy Woods, financial coach with North Lawndale Employment Network, said employers are starting to deny applicants who have a bad credit history. She added that building good credit by maintaining credit cards or taking out a small, credit-building loan can allow people to become homeowners.
The room held up to six guests every hour during the financial literacy event.
Regina Banks, pastor and project manager with The Monroe Foundation, said many more people committed to coming but may not show up. Low-income breadwinners sometimes abstain from getting financial education because of a “generational mind set,” she added.
“People say, ‘If my grandmother or aunty never got financial education, why would I go?’” Banks said. “They need some kind of motivation.”
For some attendants, the motivation may have been their children, like Keys or Austin resident Melissa Taylor.
Taylor, who attended the event to set up a bank account, has two children – a 7-year-old daughter and a 20-year-old son – and is currently paying for her son’s college tuition.
She recently completed courses at Chicago’s Le Cordon Bleu College of Culinary Arts and is looking for a job as a chef or a cook.
Taylor spent a chunk of her time at the PNC Bank booth, and said she will most likely set up a checking account there once she attends a mandatory seminar.
“I don’t want to carry my cash around in my pocket anymore,” she said.
The next Second Chance Banking event will be held in Englewood Oct. 27. Future events will be held in Maywood, Bellwood, Harvey and Chicago Heights. Call 773-315-9720 for more information.