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Many working Minnesotans aren't financially fit. Consumers are increasingly engaging in risky financial behavior, which has particularly dire consequences for those with low-incomes. This can be quite costly in both the short and long term. In the short term, precious dollars pay for avoidable financial fees. And those without retirement savings are headed for a retirement crisis that could devastate thousands of families in Minnesota alone.
Personal savings rates are at historic lows across the country while debt soars.
The number of payday loans in Minnesota has grown 45 percent per year since 2000, signifying desperation and highlighting the need to reduce the number of “unbanked” Minnesotans.
People without bank accounts often use costly money exchanges and payday lenders. Over time, check cashing fees can add up substantially.
Learn more about trends in personal financial behavior.
Employees who participate in direct deposit are less likely to use money exchanges and payday lenders because direct deposit requires an employee to either have a bank account or be paid via a payroll card. Payroll cards, or “stored value” cards, can be used to obtain cash at ATMs. Using a bank, ATM or stored value card to get cash saves employees money every pay period by avoiding check cashing fees. Furthermore, people with bank accounts or stored value cards are significantly more likely to save a portion of their paycheck.
Employers can help employees avoid money exchange fees and retain more of their income by encouraging employee participation in direct deposit. Data suggests widespread and increasing use of payroll cards:
Employers benefit from paying employees via direct deposit in the following ways:
Sources:
A ElectronicPayments.org
B State Recognition of Paycards, American Payroll Association, April 2007
C Payroll Cards Improve Direct Deposit Participation, Ezine @rticles, May 2005
While the U.S. population ages, fewer employers are offering employee retirement plans.
Many individuals aren’t saving enough for retirement.
Minorities and low-income workers are far less likely to participate in retirement savings plans, even when plans are offered. Consequently, minorities have far less in accumulated savings and retirement plans.
Learn more about retirement savings data and trends.