BALTIMORE -- Miyae Mumford of South Baltimore pays $5 a week to load her Forever 21 paycheck on a Visa card and use the money a few days early. ATM fees eat up more money when she needs cash. And if she has a paper check, she gives up a slice of that at a check cashing place.
"It's awful -- they work so hard to try to get a nickel from you," said Mumford, 21, who wants to open a bank account but is daunted by all the choices.
One in five Baltimore-area households rely on check cashing services and payday lenders rather than bank accounts to manage their money. It leaves them cobbling together a patchwork of financial services estimated to cost up to $40,000 over a lifetime, fees that advocates say are avoidable and unnecessary.
Mumford was one of 23,000 people expected to file their tax returns for free with help from the CASH Campaign, a nonprofit that tries to steer low- and moderate-income Marylanders like her to reputable banks and credit unions that have little or no fees. It is part of a movement to guide people to checking and savings accounts as a gateway toward financial stability by reducing debt, improving credit scores and securing loans with competitive fees and interest to buy cars or homes.
People don't use or even avoid banks for a variety of reasons. Some say they don't have a checking or savings account because they don't have enough money to keep it, or they just don't trust the institutions with their money. Others get blacklisted by banks when they bounce too many checks, abandon accounts with unpaid fees or get flagged for fraudulent behavior.
Robin McKinney, CEO of the CASH Campaign of Maryland, which stands for Creating Assets, Savings and Hope, said connecting with people during tax season can help them take their return -- the largest lump sum payment many will receive all year -- and deposit it in a new bank account, buy savings bonds or load the money on a pre-paid debit card.
"This is the time of year that people are focused on their financial goals," McKinney said. "It is a moment when we can get people to talk about their hopes, their dreams, their financial goals, their challenges. Tax preparation is a transaction, but we want to build a longer-term relationship."
The CASH Campaign is working with the decade-old Bank On initiative to connect with government groups, nonprofits and employers to spread the word about which banks and credit unions offer safe accounts with very low fees, and teach people how to use them.
The campaign's counselors try to walk clients through their options, including whether a checking or savings account would work better, what fees and costs they come with and what bank matches their needs, McKinney said. The Baltimore-based nonprofit group received a $90,000 matching Bank On grant for a fellow to negotiate with banks and credits unions to certify accounts that are safe and low cost and organize events to guide people toward those accounts.
McKinney said people without bank accounts are considered "unbanked." Those who have a checking or savings account but rely on alternative services such as money orders, payday loans and rent-to-own products are considered "underbanked."