CURRENC SF NEWS  

The use of prepaid cards has grown exponentially in recent years. In fact, prepaid card use grew 50% just between the years 2012 and 2014, and now 23% of the U.S. population holds some form of a prepaid card (including general use prepaid as well as “closed loop” gift cards). Since payroll cards are a type of prepaid product, employers should pay attention – payroll deposited on prepaid cards is also a growth area. For employers, it electronifies the last mile of payment, including for staff who might not have bank accounts, and makes it easy to pay employees who work remotely. Cards protect funds; if a card is lost, it can be canceled, replaced and the funds restored.

But why are people increasingly using prepaid cards, and are they as safe as bank accounts? Well, in some cases people may feel that they are safer, since prepaid typically does not allow you to overspend, incurring expensive overdraft charges that come with many bank accounts. Pew recently did some research showing that most prepaid card users do not want the option to overdraw their accounts – they use prepaid to control their spending. Nonetheless, overdraft can generate income for prepaid programs and the financial service companies that provide prepaid cards, and some industry players would like to see overdraft features added to prepaid cards.

We think this would be a bad idea, and we are joined by some experts who call on the CFPB to take a firm stance in their upcoming final prepaid rules to disallow overdraft features. Read more in this American Banker article.

We at CurrenC SF and the San Francisco Office of Financial Empowerment know that financial health is an important component of your overall health and wellbeing – along with housing and a variety of other indicators. Community development is a pretty broad category, but we couldn’t agree more with this cool video from the Federal Reserve of San Francisco: we need to stop getting stuck in our own silos and work collaboratively to make our communities better, and more healthy.

Bringing safe, affordable financial access into the workplace, and eliminating the damaging cost of check cashing, is a practical step that employers can take to join this effort. Take a look below to see some additional promising strategies.

health-cd-screenshot

We would like to let you know about two fantastic events coming up this month. Check out the information below, and don’t delay: register today!

1)  San Francisco Financial Planning Day

Do you need free expert advice about money?

Come to San Francisco Financial Planning Day and get answers to your personal finance questions. Certified Financial Planners and Credit Counselors are volunteering to offer free one-on-one counseling and financial workshops throughout the day. The event is free and open to the public.

Saturday, October 25, 2014
9:00 am – 4:00 pm
San Francisco Public Library
Main Library @ Civic Center

Click here for more information and to reserve your spot today!

2)  Forum on Financial Wellness and the Workplace @ the SF Federal Reserve

You are invited to attend a forum on Financial Wellness and the Workplace sponsored by the Federal Reserve Bank of San Francisco and United Way of the Bay Area to learn about programs and resources that promote financial wellness and stability, primarily for low-wage workers. You will have an opportunity to hear about readily accessible programs that enable employees to pay down debt, access affordable credit and banking services, and find ways to save for their future.

When: Tuesday October 21, 8:30 – 11:45 AM

Where: Federal Reserve Bank of San Francisco, 101 Market Street

Whether you are a large or small employer from the private, public and nonprofit sector, this is an issue that impacts you if it impacts your employees. These low cost and no cost programs will not only contribute to the financial wellness and stability of employees, but also reap benefits for your workplace. Please register today and join your peers to learn as well as share what you are doing to support financial wellness in the workplace.

There is no cost to attend, but advanced registration is required.

 

Did you know?
The last day to register to vote for the June 2014 primary election is May 19th, which means you have LESS THAN A WEEK!

Did you also know?
Voter registration is available online NOW in TEN different languages!

Get registered today: http://registertovote.ca.gov/

Thank you to the Greenlining Institute for the reminder!

A recent report by Bank of America Merrill Lynch discusses how American employers are significantly changing how they offer financial benefits to their employees. While part of the report focuses on retirement plans and health insurance (both important issues), there were also a number of great findings about how and why employers increasingly offer education and guidance on a range of other financial wellness topics. Let’s take a quick look at some of these:

  • 55% of employers surveyed believe financial wellness leads to greater productivity.
  • 70% of companies offer education and guidance on retirement savings.
  • 73% of human resource professionals said they have needed to become experts on health care and retirement to do their job effectively – a significant change in their role.
  • 46% of employers provide some advice and guidance to pre-retirees to help them transition into retirement, but the majority believe their advice could be better.

So far so good, but what about the many employees who don’t have access to retirement plans (or healthcare insurance) through their work? And let’s also acknowledge that for many employees, retirement planning is something that doesn’t seem very real or relevant to them – they are struggling with day-to-day issues around credit, debt, financial stress, and the costs of living, especially in an expensive city like San Francisco. Well, there are some encouraging signs in the report that employer thinking is evolving toward a more holistic picture of financial wellbeing.

For example, here’s a quick “infographic” from the report about what employees are asking for help with:

Employees asking for financial help infographic

So we can see budgeting and managing debt added to the picture. And here’s another graphic showing what some leading companies are doing:

 

Leading companies offer financial help graphic

 Now we have indication that at least some businesses are offering a variety of financial wellness supports to their employees. Indeed, the report goes on to say that “leading edge” employers have started to implement financial wellness programs that include things like financial education workshops/seminars, online financial advice, access to a financial advisor, and other “holistic” tools to increase financial literacy and wellbeing. This is great to see, and I was especially impressed that among employers who make at least some financial education available, 77% give employees time during work hours to receive education and guidance on financial matters. That’s huge – employees are much more likely to take advantage of these tools on paid time rather than staying late or sacrificing pay.

But at the SF Office of Financial Empowerment, we still feel that something is missing. More than 18% of households in the Bay Area are either unbanked and underbanked, and the use of fringe financial services like check cashers and payday lenders continues to be a big problem for household finances. We’ve found that among low-income working households in San Francisco, roughly 70% do not get paid by direct deposit – another sign that many thousands of employers are taking their check to the check casher to access their money, at a cost of $700 to $1,000 or more per year. This is hard-earned money that should be going toward basic needs (and back into the local community) instead of being wasted on high-priced fringe financial services.

We are asking our local employers to join us in the CurrenC SF initiative and make sure that all employees have basic financial access that is safe, affordable, and convenient. Yes, we need to offer financial education and talk about retirement savings, but first things first: let’s build a foundation by helping employees get a checking or savings account, and enroll in direct deposit. Then we’ll work together on plans for workplace-based financial education. In fact, we are partnering with Mission Economic Development Agency (MEDA) to pilot a workplace financial education program at six area hotels over the next couple of years.

Let me close with one more graphic that we agree with, and that we hope employers increasingly are agreeing with as well. Focusing on financial wellness for your employees not only makes their lives easier, it has benefits for your company:

Employee financial wellbeing has work benefits graphic

Take the first step today by joining CurrenC SF and working in partnership with the City of San Francisco to build financial wellness for your employees.