Disabled face big financial hurdles

Originally published in the Clarion-Ledger on 5/16/2015.

PDF: Disabled face big financial hurdles

If you have a disability, many things which most of us take for granted can be difficult or even hazardous.  While some of these are well-known – such as stairs for people in wheelchairs, or crossing the street for the visually-impaired – many people don’t think about how difficult it might be for people with disabilities to access financial services at a bank or other financial institution.

While most of us would just get in our car, drive up to the bank and make our deposit, withdraw money or take out a loan, it’s just not that simple if you have a disability. Even checking your account balance online constitutes an insurmountable challenge for some people with disabilities.

You’d think that the growth of smartphones and other newer technologies could alleviate the problem, but it appears that many disabled Mississippians are on the outside looking in when it comes to accessing financial services. People with disabilities may face all sorts of financial challenges, including lower income, higher expenses, lack of experience managing their money, being victims of scams and crime and accumulation of debt.

A recent study by the National Disability Institute (NDI) looked at data from the Federal Deposit Insurance Corporation’s (FDIC) 2013 report on “unbanked” or “underbanked” households in the U.S. The study found that approximately 68 million adults and 25 million children (disabled or not) live in households with either no relationship with a financial institution or get by with a hodgepodge of financial strategies which can be expensive and risky.

The report found that Mississippi has the nation’s fourth-highest rates of disabled citizens without adequate access to financial services. One reason is that we have a higher percentage of citizens with disabilities in the first place. “According to the U.S. Census Bureau’s American Fact Finder, in the state of Mississippi, 14.9 percent of working-age residents between the ages of 18 and 64 years old are disabled, compared to the national average of 10.1 percent,” noted Mercedes Garcia, Vice President of Global Community Relations at MasterCard. “Of these disabled residents, 68.7 percent are unbanked or underbanked… This means they have little or no access to traditional banking services and are instead, often rely on payday lenders, check-cashing centers and other alternative financial services, which can be costly.”

In other words, nearly 7 out of 10 Mississippians with disabilities have little or no access to the financial services most of us use on a daily basis. So I asked Garcia what are the implications of that for the everyday lives of disabled Mississippians without adequate access to traditional financial services.

“The costs of being financially underserved include higher vulnerability to crime, time and money spent cashing checks and making payments, and limited access to goods and services outside of one’s immediate neighborhood,” she noted, adding that a 2014 U.S. Postal Service study found that households that are financially underserved spend disproportionate amounts on fees and interest. “The average financially underserved household spends nearly 10 percent of their income on fees and interest to access their money.”

And having a disability might make you more vulnerable to being preyed upon as well. “NDI notes that people with disabilities face significant economic challenges, including lower employment rates and income, compared to those without disabilities,” Garcia said. “As a result, people with disabilities may be more vulnerable to predatory lending strategies that accelerate debt and financial instability.”

But the problem doesn’t have to be permanent. Newer technologies might provide an answer to at least part of the problem. “Electronic payment technology provides an effective solution that can empower them to access their money in ways that are more convenient and safer for them,” Garcia explains. “Tools like municipal cards, payroll cards and prepaid cards can offer them a convenient way to pay bills, make purchases and conduct a host of other transactions. To be clear, we are not selling cards. We simply want people to understand that the disabled unbanked and underbanked can have the same access and convenience of electronic payment technology that most people use daily without a second thought.”

And getting financial services to people in underserved communities can happen with collaboration from all sectors, as well as education, she noted. One such program is Master Your Card, which Garcia described as a community empowerment program. “MYC works with the unbanked and underbanked to help them understand how to choose and use electronic payment technology to their benefit” she explains.

“We seek input, work collaboratively on innovative solutions and provide education about how people can get the most from their money through the smart use of electronic payments. We encourage communities to provide information to disabled residents on how they can use technologies like prepaid or municipal cards (where available) to their advantage.”

To download the complete NDI study, visit http://www.realeconomicimpact.org/data/files/reports/NDI_banking_status_financial_behaviors_report_2015.pdf.

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