I'm a benefits specialist working with people with disabilities, what is the first step for my consumers to become financially literate and economically self-sufficient?

One of the most startling statistics regarding the financial situation of people with disabilities is that only 54% of people with disabilities have no savings account and 69% have no checking account.ⁱ

Despite the fact that many of these same individuals are living solely on government benefits, an incredible number do not use direct deposit of benefits checks because they have no account at a financial institution. So, the question is, where are people cashing these checks and what are they doing with the money once they receive the cash? Of course, the answer for many without any connection to the financial mainstream is that they are cashing their checks at the grocery store or check cashing places and paying incredible sums to do so.

Considering the fact that people on Supplemental Security Income (SSI) are receiving $603ⁱⁱ, any amount cuts into the money used for rent, food, and other essential goods and services needed to survive. Even without check cashing fees, benefits recipients are still taking significant risks by having what is usually their sole source of income in cash.

So why do individuals living on benefits pay large percentages to cash their checks and take the risk of having the money in cash rather than safely protected in a financial institution? The answer is generally not a lack of knowledge or fear of financial institutions. The problem for people surviving on benefits is mandatory minimum balances and the hidden fees of so-called "free checking". There is also the consideration of "hidden" income. People with disabilities living on disability benefits know that the Social Security Administration tracks their income through financial institutions. If they deposit earnings into an account, they live in genuine fear of SSA discovering their alternative sources of income.

While we acknowledge the obstacles and difficulty that living on government disability benefits imposes, living outside the financial mainstream destines a life of poverty. There are alternatives to exploitative check cashing schemes and punitive fees of many financial institutions. Many people with disabilities are turning to credit unions to find a balance between large banks that fail to recognize their unique situations and living outside the financial mainstream.

Credit Unions- especially Community Development Credit Unions- offer an alternative for people of very low incomes. Frequently, many of these credit unions offer personalized service to people that may have additional needs than large banks. To find a CDCU near you, the National Federation of Community Development Credit Unions has a list of their membership organizations that can help serve people with disabilities. NFCDCU has a disability initiative designed to educated their members about serving people with disabilities and is actively seeking out opportunities to provide better service to people in the disability community.

The U.S. Department of the Treasury and the Federal Reserve Banks are sponsoring Go Direct, a campaign to motivate people who receive federal benefit checks to use direct deposit. Direct deposit is simply the best way for people to get their Social Security and SSI payments because it eliminates the risk of stolen checks, reduces fraud and gives them more control over their money. Moreover, direct deposit allows immediate access to funds from virtually anywhere. Credit Unions interested in getting involved in the GoDirect project can learn more here: http://www.godirect.org/Partners/Become-a-Go-Direct-Partner.html

Individuals interested in signing up for direct deposit or establishing an account to do so, can learn more by going to this website. There is information for online setup, as well as a toll-free hotline available in both English and Spanish. http://www.godirect.gov/Signup/welcome.cfm

i 2004 National Organizations on Disability/Harris Poll