Kentucky: Consumers Get a Fresh Start in Louisville

Did you ever wonder why some people conduct financial transactions on a "cash-only" basis? It may be because they have no choice.

When consumers do not handle checking accounts responsibly, it could be virtually impossible for them to open future accounts. They may be forced to carry cash, more than likely use high-cost check cashing outlets and purchase money orders for paying bills that require payments by check.

Fresh Start is a pilot program in Louisville, Ky., designed to give a participant who has been denied account privileges at a local bank a second chance—a chance to open a checking account and to prove he or she will handle it responsibly.

A consumer enrolling in Fresh Start agrees to pay back any previous debt related to overdrafts and to take basic training in how to manage a checking account. The curriculum includes hands-on practical exercises in personal budgeting and in using check registers and statements.

After satisfying the repayment and counseling requirements, the participant receives a certificate of completion. This certificate can be presented at a participating bank, and the consumer will be able to open a checking account. Shauna Cook of the Louisville Urban League said she recommends that, in addition to the certificate of completion, participants should carry receipts showing that the old debts have been paid.

Two credit counseling agencies (the Louisville Urban League and Consumer Credit Counseling Service) offer the course and certification. Consumer Credit Counseling charges a $50 fee; there is no charge for the Urban League course.

Fresh Start's initial funding was provided through a multi-bank grant to the Louisville Community Development Bank. The funds were used to print informational materials, fliers and certificates of completion. Partners in the program include Louisville Community Development Bank, PNC, Bank One, National City Bank, Firstar Bank, Commonwealth Bank and Trust, Fifth Third Bank, Republic Bank, Bank of Louisville, Star Bank, First Capital, Stock Yards Bank & Trust Co., Louisville Urban League and Consumer Credit Counseling Service.

The pilot program is still young—it kicked off in summer 2001. But Cook can already claim success.

"We've probably had a total of eight clients (in the pilot program). They've all been very successful," she says. She adds, "The banks here are geared up and ready to advertise this. We're getting more calls on it, so I expect it to pick up a great deal."