Banking on Bicycles

January 3, 2012

Bank On DC and local government officials want more of Washington's unbanked to join the financial mainstream. So they joined forces with a local bikeshare program and now offer discounted memberships in that program (known as Capital Bikeshare) to unbanked Washingtonians who open debit or credit card accounts at two local Bank On institutions - United Bank and District Government Employees Federal Credit Union (DGEFCU).

A statement released last month by the District Department of Transportation said "The partnership was concieved to promote a healthy and environmentally-friendly form of transit, along with the benefits of financial stability and security."

According to the national Bank On data base, 12.2% of Washington households are unbanked; the national average is 7.2% of households. The U.S. Census Bureau reports that nearly a fourth of DC residents don't have access to automobiles.

Capital Bikeshare is part of a growing movement in towns and cities across the country aimed at getting local folks (and tourists, too) out of their autos and onto bikes, especially for short hops. The program makes available 1,100 bikes that can be rented and/or returned, using credit and debit cards, at more than 130 locations in the metro area.

Capital Bikeshare ain't cheap, however; there's a $75 annual membership fee; hourly rental fees; and a hefty penalty fee ($1,000) for lost and stolen bikes.

The program with Bank On DC provides a $25 gift certificate toward Capital Bikeshare's annual membership fee to those unbanked Washingtonians who open credit/debit card accounts with United Bank or DGEFCU, which they need in order to rent bikes. Residents already participating in the Bank On DC program who want to join the bikeshare program also qualify for a $25 discount on the annual program membership fee.

It's a novel idea. And it's nice to see local governments thinking outside the box in addressing the plight of the unbanked.

There hasn't been much local press coverage of the Bank On DC - Capital Bikeshare program, however, and a blogger at Reuters has questioned its viability given the fees charged for bike rentals. That blogger, Felix Salmon, reasoned that for many unbanked money put toward a yearly membership in Washington Bikeshare is money "desperately needed for food or rent."

I'm inclined to agree.

Plus, the usage fees are a bit steep.

Giving the unbanked folks a pass on a one-year membership for opening bank accounts would make for a far better deal.

More than 8,200 federally-insured financial institutions were collecting deposits and/or making loans to the U.S. "banking public" as of March 31, 2009.

_-FDIC