United Way of Greater Knoxville News

10 percent of Tennessee families don’t have bank accounts

One out of every 10 Tennessee households (approximately 249,000 households) doesn’t have a bank or credit union account, and those going without are more likely to be minority and low-income consumers, according to a report published in December by the Federal Deposit Insurance Corporation.

Tennessee exceeds the national average of 7.7% and ranks 51st in the nation in the number of households who are unbanked.  A third of Tennessee’s unbanked are African-American families. 

Additionally, another 17.5% are underbanked, meaning they use alternative financial products such as payday loans, pawnshop loans, refund anticipation loans, etc…

The FDIC survey found that households with no bank accounts tend to make less than $30,000 per year and don’t have anyone with a high school diploma.

Other factors, including a lack of trust of banks, also can come into play as well as a previous negative banking relationship. 

Some lower-income consumers prefer payday lenders despite the high fees assessed there.  They know when they go in they will be charged a flat fee.  To many, they prefer the simplicity of these products and may perceive a relationship with a bank or credit union as more difficult to understand.

The Knoxville Alliance for Financial Independence (KAFI), a local coalition of both non-profit and financial organizations, based out of the United Way of Greater Knoxville, is coming together to address this issue.  “Our goal is to assist low-moderate income families to become more financially stable and one way to achieve this is by educating individuals on the importance of using lower-cost, interest-bearing financial products”, stated Ben Landers, President/CEO of United Way of Greater Knoxville.

The coalition is coming together to create a portfolio of local checking and savings account options and will be educating individuals who participate in the Volunteer Income Tax Assistance (VITA) program, while they are there getting their taxes prepared.  According to Kristina Canan, a KAFI coalition member and financial educator with Knoxville TVA Employees Credit Union, “It’s important that we not just hand them information, but that individuals understand their responsibility in using those accounts appropriately.”  Coalition members are coming together to be available for one-on-one financial counseling with individuals who use the L.T. Ross (Western Avenue) VITA tax site.

The VITA program offers free tax preparation services to individuals who make $49,000 or less annually.  Taxes are prepared by volunteers who are IRS certified to prepare taxes.  In order to get more information and hours of operation, individuals should call 211 (information and referral service).  Returns are filed electronically and FULL refunds are usually received within 7-10 days.  The KAFI coalition strongly encourages low-moderate income families to use this free service and maximize their income tax refunds.

For further information on the KAFI coalition or VITA program, contact Karen Pershing at United Way of Greater Knoxville (865)523-9131