When you can't get a checking account, where do you go?

Roberto Pagan-Franco didn't have a bank account for decades. His employer paid him in cash or with a check that the Baltimore resident took to a check-cashing store. A few years ago he lost his job after a severe illness and for a time was homeless.

Not exactly the type of customer you'd expect a big bank to court.

But Pagan-Franco enrolled in a PNC Bank program that targets consumers who otherwise might be shut out of the banking system. And today, the 54-year-old has checking and savings accounts at PNC and is in the process of getting a credit card.

"It's been very rewarding. I'm in a better place," says Pagan-Franco, who recently landed a steady job as a driver.

As much as we gripe about banks, it's still important for consumers to have a relationship with such a financial institution, which is why the PNC outreach deserves applause. Not only can a bank or a credit union be a less expensive way to handle your money than alternatives like check-cashing stores, but it can give you access to other financial products.

Nearly 8 percent of U.S. households — or at least 17 million adults — don't have a bank account, according to a 2009 study by the Federal Deposit Insurance Corp. That includes 121,000 Marylanders.

Some people remain "unbanked" by choice. But others can't open a basic checking account because they have been blacklisted by their file on ChexSystems, a reporting agency that collects negative information. Most banks refer to ChexSystems when deciding whether to accept a new customer.

Consumers can receive a negative report for a variety of reasons. For instance, if you or the bank closed a previous checking account while you still owed overdraft fees, a negative report will be generated and will remain in the system for five years.

There are, of course, alternatives to banks. But check-cashing stores are expensive. And a prepaid debit card generally doesn't have the same consumer protections as a bank account, says Jean Ann Fox, director of financial services with the Consumer Federation of America.

"It's even more important to have a checking account in this day and age," says Linda Sherry, a spokeswoman with Consumer Action in Washington. "You want to show that you are a solid individual who manages his or her finances well and who is fiscally responsible. This is one of the ways that society vets you."

Some institutions have created "second chance" checking accounts, although they aren't common.

Texas-based Woodforest National Bank, which has branches in Maryland, offers such accounts, although the fees are higher than those at PNC and it takes a year to graduate to a regular checking account.

(MECU of Baltimore won't open a checking account for consumers who have negative files on ChexSystems. But the credit union will give these consumers a savings account and after six months — if they repaid any money owed to their prior bank and showed good money management — will allow them to open a checking account, says Dorothea Stierhoff, senior public relations manager.)

PNC's program, Foundations Checking, is nearly 10 years old.

"Our goal is to help everybody be bankable," says Annie Spain, branch manager at PNC's Charles Village branch, where Pagan-Franco now banks.

PNC officials say the program is open to people who lack a strong credit history or who have a negative report on ChexSystems — as long as it doesn't involve fraud.

Consumers must take a free money management class that teaches budgeting, saving, reducing debt, how to handle a checking account and how to avoid overdrafts. The classes are run by bank employees or staffers at nonprofits who have been trained by PNC.

After completing the class, participants get a provisional checking account for 90 days that costs $5 a month. They aren't allowed to withdraw more than $100 a day from an ATM and debit transactions can't exceed $100 a day.

If consumers manage the account without overdrawing for three months, they graduate to a free regular checking account. Sixty percent of participants graduate, Spain says. Those who don't get another 90-day trial, she says.

As of late last year, 1,748 Marylanders had completed the program.

That includes Pagan-Franco.

He says he had a military bank account up until the early 1980s, when he left the U.S. Army. After that, he moved frequently and never opened another account.

A caseworker at a homeless shelter told him about the PNC program a couple of years ago. Pagan-Franco says he learned budgeting and no longer worries about running out of money. Thanks to the program, he says, he has bank accounts and his financial life is stable.

That sounds like a successful program.


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