What Is a Community Bank and Why Consider One?

There are several benefits customers receive when they bank at financial institutions. What is less discussed, however, are unbanked Americans. According to Michael Pugh, president and CEO of Carver Federal Savings Bank, 5.4% of all U.S. households are unbanked.

Banks that are willing to evaluate new customers as applicants, especially those who may not exhibit traditional creditworthiness on paper, can help change this narrative. One type of bank working to shift the unbanked into banking customers is a community bank. Pugh joins GOBankingRates to share more about community banks and their benefits. Here’s why it’s worth considering banking with a community bank.

What’s a Community Bank?

A community bank takes a holistic approach to banking, Pugh said. Rather than focus solely on credit scores and quantitative data, a community bank looks at the value an individual or small business will bring to its surrounding community with the right access to capital. This helps better inform lending decisions.

Read more at GOBankingRates

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Our #IRS Interactive Tax Assistant has answers.

Watch this short video to learn more:

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Jose L. Santiago

Public Affairs Specialist

Tax Outreach, Partnership and Education

Email: [email protected]

Green Dot Sees Demand From Unbanked Cash-Paying Customers

Green Dot Network is focusing on unbanked consumers who pay bills in cash.

The bank holding company announced in a Tuesday (Feb. 21) press release it has expanded its list of partners to include companies that focus on “underserved minority groups that tend to be significantly more dependent on cash” than the average consumer.

“Cash payments make up 60% of payments by unbanked consumers (compared to 20% of banked consumers), making cash access critical for these and other cash-preferred consumers,” Green Dot said in the release.

The company’s newest partners include Broxel, a FinTech that works with Hispanic customers and lets them manage accounts and cards in pesos and U.S. dollars, and Greenwood, a digital bank targeting Black and Latino customers, according to the release.

Read more at PYMNTS.COM

Underbanked or Unbanked? Alternative Financial Practices Explained

Although brick-and-mortar banks are still very popular, banking has evolved into a digital-based system over the years. And while most people are fully banked, meaning they have a checking or savings account with an FDIC-insured financial institution, others choose to be underbanked or unbanked.

So what does it mean to be underbanked vs. unbanked? People who are considered underbanked have a checking or savings account but use alternative financial services, while the unbanked have no bank or savings account at all. But these explanations do not stop here, so read on for more.

What does it mean to be underbanked?

Individuals or families who are considered underbanked have a bank account but may skip using traditional financial products like direct deposits, credit cards, and loans. Instead, they may rely on alternative services like payday loans, money orders, and check-cashing to pay for purchases and manage their finances.

Read more at MARKET REALIST

Consumer Financial Protection Bureau’s fate is again in the hands of the Supreme Court

The Supreme Court may decide as soon as Friday whether to tackle a new case that could further constrain the power of US regulators to delve into American businesses and individual lives.

In recent rulings, this conservative-dominated high court has been diminishing regulatory control for consumer protection, public health and the environment. The justices’ opinions have revealed major separation-of-powers concerns, along with a particular disdain for the countless pages of rules government imposes and a disregard for agency expertise, whether involving health services, workplace safety or consumer affairs.

The new case picks up from a battle three years ago involving the Consumer Financial Protection Bureau, when opponents targeted the agency’s structure and tried to dismantle its authority to safeguard mortgages, car loans, credit cards and other lending practices.

Read more at CNN

Debt collectors re-evaluate medical debt furnishing in light of data integrity issues: Consumer Financial Protection Bureau (CFPB)

A new CFPB report estimates that medical collections tradelines declined by 37 percent between 2018 and 2022. “Market Snapshot: An Update on Third-Party Debt Collections Tradelines Reporting” also found that medical debt constitutes a majority (57 percent) of all collections on credit reports. This decline, as well as insights from CFPB market monitoring, suggests that debt collectors are moving away from reporting (or furnishing) medical bills to credit reporting companies, resulting in fewer medical tradelines on consumer credit reports. This decline may be partly explained by structural dysfunctions in medical billing and collections, which increase the risk that debt collectors will not meet their legal obligations.

Furnishing medical debt is on the decline, in part due to structural challenges that can result in false and inaccurate information

Most debt collectors collecting on unpaid medical bills do not have timely access to the healthcare providers’ billing and payment information. As a result, debt collectors may be unable to verify whether the medical bills they are collecting on are consistent with healthcare providers’ records, much less verify the underlying accuracy of the bill.

Read more at Consumer Financial Protection Bureau (CFPB)

What is a payday loan? Consumer Financial Protection Bureau (CFPB)

While there is no set definition of a payday loan, it is usually a short-term, high cost loan, generally for $500 or less, that is typically due on your next payday. Depending on your state law, payday loans may be available through storefront payday lenders or online.

Some common features of a payday loan:

The loans are for small amounts, and many states set a limit on payday loan size. $500 is a common loan limit although limits range above and below this amount.

A payday loan is usually repaid in a single payment on the borrower’s next payday, or when income is received from another source such as a pension or Social Security. The due date is typically two to four weeks from the date the loan was made. 

Read more at Consumer Financial Protection Bureau (CFPB)

Name change for Rent-A-Center parent company to Upbound Group, Inc.

Rent-A-Center, Inc. is changing its name to better reflect its capabilities and resources.

The parent company of Rent-A-Center, Acima and other consumer brands said that it will now be known as Upbound Group, Inc., “an omni-channel platform company that enables a broader range of consumers to access flexible financial solutions.” The company will begin to trade under the ticker NASDAQ: UPBD starting on February 27th.

The company will continue to go to market under its well-established operating brands, including Rent-A-Center, the lease-to-own retail channel with more than 2,400 stores, and Acima, a leader in the third-party, virtual lease-to-own industry. (The company acquired Acima Holdings for $1.27 billion in cash and approximately 10.8 million shares of Rent-A-Center common stock. Total consideration for the deal was $1.65 billion.)

“Two years ago, Rent-A-Center, Inc. closed on its acquisition of Acima Holdings, almost doubling the size of the company and dramatically changing both organizations,” Mitch Fadel, CEO, Upbound. “We are now a unified, multi-brand platform company that includes more than just the Rent-A-Center business. 

Read more at Chain Store Age

How, Why and When to Check (or Freeze) Your Credit Score: AARP

Monitoring your creditworthiness is key for tracking your financial health and spotting fraud

If the idea of checking your creditworthiness makes you a little nervous, you’re not alone. A Zest/Harris Poll released in 2020 found that for more than a third of Americans, even looking up their credit score — the three-digit number evaluating your financial health — filled them with more dread than getting on a scale to check their weight. 

And nearly a third have never even examined the data in their credit report, a record of their recent financial history, according to a Harris Poll on behalf of the American Institute of CPAs (AICPA) released in 2021.

Read more at AARP