Instant Pay for Millennials

Can you imagine getting paid each day that you work? That’s the idea behind Instant Financial’s app, which puts cash in the hands of workers on the same day they work. This program attempts to reduce absenteeism and employee turnover for restaurant chains.

At the end of each workday, employees may take 50 per cent of their pay for that day and transfer it to an instant account; the other half is paid at the end of the regular pay period. Funds in the Instant account may be accessed with a debit card or transferred to a bank account.

The app can reduce the use of payday loans, with exorbitant borrowing rates, as workers have access to funds between pay periods. Instant Financial makes money from fees charged employers and merchants when debit cards are used; although employees may pay ATM fees.

A major concern of the app is that it might discourage long-term financial planning. Poor budgeting habits could result in increased use of debt due to a lack of funds at the end of the month. Employees who use the app are encouraged to practice wise money management, including creating and building an emergency fund and other savings.

For additional information on instant pay, click here.

Teaching Suggestions

  • Have students talk with others about the benefits and drawbacks of an instant account.
  • Have students describe two situations: (1) a person who used the instant account wisely, and (2) someone who mismanaged their money as a result of using the instant account.

Discussion Questions 

  1. What factors might be considered when deciding whether or not to use an instant account?
  2. Describe how an instant account might result in improved money management and in weakened money management activities.

Newcomer Money Guides

While beneficiary, collateral, and fair market value are familiar to many, these terms can be especially confusing to those with limited English-language skills. In an attempt to assist various people, the Consumer Financial Protection Bureau has created the Newcomer’s Guides to Managing Money to provide recent immigrants with information about basic money decisions.  These guides offer brief suggestions to those who are new to the U.S. banking system.  The guides also include guidance for submitting and resolving problems with a financial product or service.

The Newcomer Guides include these topics:

  • Ways to receive your money, comparing cash, check, direct deposit, and debit cards.
  • Checklist for opening an account, to assist with starting a bank or credit union account.
  • Ways to pay your bills, providing guidance on whether to pay by check, debit card, credit card, or online.
  • Selecting financial products and services, providing assistance on deciding which financial services are right for various household situations.

Print copies of the guides can be ordered or downloaded. These publications are available to English and Spanish with additional languages to be offered in the future.

For additional information on money guides for newcomers:

Article #1
Article #2
Article #3

Teaching Suggestions

  • Have students ask people to create a list of financial planning terms that people find confusing.
  • Have students suggest methods to have people learn about confusing financial planning terms.

Discussion Questions 

  1. What financial problems might be encountered by people with limited English-language skills?
  2. What actions might be taken to assist various groups to better understand banking services and money management activities?

Six Bank Fees to Avoid

Each year, it seems that banks are reporting ever higher profits.  How do they make so much money?  By charging customers service fees!

Here is a list of six fees that you should avoid:

  1. ATM Fees-It’s important to know where ATM’s are located that are in your network. This will help you avoid a charge to use another bank’s ATM.
  2. Account Fees-Check the fine print. Is there a fee if your balance falls below a certain limit? The limit fees are monthly and can really add up.
  3. Overdraft Fees-Know how much money that you have to spend. Budget wisely and make sure that you have a cushion in your checking account, in case of unexpected expenses.
  4. Fancy Checks-How cute! How much do those Frozen Personalized checks cost? The reality is that the checks and the shipping costs can be very expensive. There are numerous options to acquire cheaper checks (Sam’s club, BJ’s, Costco, Walmart).  One more thing to consider:  checks are used much less frequently today, so, that box of Frozen checks might last a really long time, make sure you like the design.
  5. Credit Reports-You can get a copy of your credit report for free from AnnualCreditReport.com, so, don’t pay for one.
  6. Loan Interest– As an incentive, banks offer a discount by utilizing more than one of their services. You might get a lower rate, if you agree to direct deposit, in exchange for a reduced interest rate on your loan.

Bottom Line: Do your homework when it comes to bank fees.  There are many ways to avoid spending money on unnecessary fees.

For more information:  http://www.wisebread.com/are-you-paying-these-6-unfair-banking-fees

Teaching points:

  • Discuss these six fees with your students. Survey how many have paid at least one of these fees.
  • Have students research at least two local banks and report back on the account fees that each bank charges.

Discussion items:

  1. Do you believe that any one demographic pays more fees than another? Why?
  2. What are some other ways that people can avoid these fees?