09:29 AM PDT on Thursday, June 3, 2010

Special to The Press-Enterprise

For most Inland residents, stopping by the bank or using an ATM are mundane tasks, but for thousands of their neighbors, it’s a foreign concept.

Those who fall into the category of the “unbanked” and don’t have a checking or savings account turn to check cashers, grocery stores or payday lenders to get the cash or money orders they need to pay their bills.

In the Riverside metro area, according to data compiled by the Federal Deposit Insurance Corp., more than 150,000 households, or 11.5 percent, are described as “unbanked” — a situation that could cost them hundreds of dollars a year.

In California, 9 million households, or 7.7 percent, were classified as unbanked, according to the FDIC.

Most of the unbanked Inland residents are employed but still “disconnected from the financial mainstream,” said Rita Fillingane, director of research and information with the California and Nevada Credit Union Leagues in Ontario.

She said some turn to check-cashing businesses, while others, including many immigrants, use ethnic grocery stores to cash their pay checks, for a fee. These outlets also offer the opportunity to purchase cashiers checks or money orders, and to send money to family in Mexico and other countries, she said.

“We need to educate them so they understand that a credit union or bank (allows) consumers to take control of their finances,” Fillingane said.

Banks and credit unions offer many of the same services that check-cashing businesses offer, including remitting money to Mexico, but with lower fees.

Ernie Hwang, president of Riverside-based Security California Bancorp, said people without bank accounts face higher fees and interest rates on every transaction.

According to the Bank on California project, the average person using check cashers will spend an extra 5 percent of his or her income annually for the service.

That means having a bank account could save the average person about $800 a year, according to data compiled by the project.

Hwang said his company, which is the parent of Security Bank of California, works with its small-business clients to get their employees to open checking accounts.

“Our big thing is education,” Hwang said.

The Bank on California project is a private/public partnership created by Gov. Arnold Schwarzenegger that launched statewide in December 2008. It aims to help the 9 million California families that don’t have bank accounts by getting them to open starter accounts.

These starter accounts don’t require a monthly minimum balance, charge a $10 monthly fee, and waive overdraft fees for a period of time.

So far, 37 banks and credit unions have joined the project to offer starter accounts to the unbanked in Fresno, Los Angeles, Oakland, San Francisco, Sacramento, San Jose and Santa Ana.

Despite not being on the list, Bank of America offers starter accounts at every branch in California, including in Riverside and San Bernardino counties, said Spike Keil, program specialist with Bank on California in Sacramento.

As of March 31, the Bank on California program had led to 110,064 new accounts statewide, Keil said.

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