It’s hard to believe that a nation as wealthy as the United States ranks only 23rd out of 38 high income nations in the percentage of people who have a bank account. Perhaps even more alarming is that the share of adults in the poorest 40 percent of U.S. households who are “unbanked” is eight times higher than in Canada, the United Kingdom or Australia.
It’s a worrisome problem that ties into the poor financial health of our population – and your employees. It makes solutions like workplace banking services ideal to add to your financial wellness strategy, providing easier access to checking and savings options, small loans from vetted institutions and, often, a valuable arsenal of wellness resources and tools.
Workplace banking benefits employers, too. Offering assistance for relieving employees’ financial stressors can decrease absenteeism, increase presenteeism and improve the overall physical and mental health of your population that can ultimately drive up your healthcare spend. It also differentiates your organization in the never-ending quest to attract and retain employees.
People who live (and have trouble stretching their money) from paycheck to paycheck pay a compounded price with lack of banking access:
- About half of adult credit card holders always carry a balance if they don’t consistently pay in full.
- Payday loans are taken out by some 12 million people each year; fees equate to an APR of nearly 400 percent.
- 19 percent of eligible 401(k) participants had loans out against their accounts at the end of 2015.
Among the features that a workplace banking program might include are services like:
- Lines of credit. Credit lines in smaller dollar amounts and other loan services at below-market interest rates are an equal opportunity benefit: Think minimum wage workers who might otherwise opt for payday loans when their paychecks fall short or when they have an unexpected expense or higher paid employees that likely take on more credit card debt to cover even a $500 emergency. Workplace banking providers typically are more open to lending to your employees, considering them a comparatively low risk, especially if they have a fairly long tenure with your organization. Some providers will also make special loan offers that appeal to a broad swath or your employee base, like lower rates or closing costs on home mortgages.
- Prepaid debit cards. These are an option serving the needs of the underbanked who may run short of money before the next payday. Through prepaid debit cards, you can advance them their pay – and they can avoid the high cost of payday loans.
- Financial wellness resources. Not only can you open the door to banking services for your employees, but these programs also are helpful in providing face-to-face and digital real world information about their credit, how to manage and restore it, budgeting and finance in general.
With any workplace banking solution, be sure to check the contract for liability before moving forward. Employers will want to make sure it follows typical terms, and ensure employers are only responsible for payroll deductions, and not held liable if an employee leaves the organization with a balance outstanding.
HUB International’s team is ready to help you assess and put in place programs and services to help address the financial wellbeing of your workforce.