The state of Illinois is now empowered to promote low-fee banking products that are tailored to low-income customers who don’t qualify or can’t afford to access conventional services.
Governor J.B. Pritzker signed the legislation with a goal of making it easier for residents who aren’t currently served by banks to find suitable consumer-friendly banking products.
The measure does not oblige financial institutions to create products for low-income, high-risk customers. But it does empower the state to compile a list of such services and share it with potential customers.
The bill comes as a response to the needs of about one-fifth of Illinois households that fulfill their financial needs outside the traditional banking system. These people often have no alternative but to use high-fee payday loans, pawn shops, and the like. Pritzker points out that these residents, on average, pay about $40,000 in fees during their lifetimes.
While the measure does not deal with this issue directly, it authorizes Illinois comptroller Susan Mendoza to make publicly available information on the most favorable banking and credit union products on the market. This applies to products that don’t impose maintenance fees, overdrafts with limited interest charges, and secured consumer loans for low-credit score users.
The bill doesn’t allow the comptroller to develop new programs, but only to publicly highlight financial products that are most favorable. The bill was passed unanimously and the best banking products will be identified in collaboration with an advisory board.
Illinois authorities believe the list of the low-fee banking products will encourage banks to extend their offerings. Now any Illinois resident can visit the comptroller’s official website, type their address, and find suitable banking options in their area.
“Many of us take for granted being able to cash a check at our bank, open a savings account to plan for our family’s future, or secure a loan at a reasonable interest rate. But thousands of Illinoisans don’t have these options, and they pay for it in inordinate fees and sky-high interest rates. Bank on Illinois will help them break that cycle,” said Mendoza in a statement.