Latest on individual development accounts

Participants who save in an IDA have their money matched, dollar-for-dollar.

Individual Development Accounts are a relatively new form of matched savings accounts that enable income-eligible families to save for assets like a home, education expenses or.

Grant recipients help low-income participants set up and use special savings accounts called individual development accounts .

In addition to earning match dollars, participants learn about budgeting, saving, banking and more when they open an IDA.

Account holders may also receive one-on-one counseling and other training.

A bill currently in Congress would provide more than $1 billion to set up about 900,000 IDA accounts.

Any individual, organization or business can contribute match dollars to IDAs.

The “Savings for Working Families Act” would cover 100 percent of matching funds , and provide $100 for each new account opened and $30 for each account maintained. The majority of institutions require no minimum balance for opening an account, although eight banks require opening deposits of $1 to $30, and seven credit unions require opening balances of $5 to $2 At the time of the interviews, about half of the banks in the sample had opened 30 accounts or fewer, and over three-quarters of credit unions held fewer than 50 accounts each.

Accounts do not cover costs as currently designed at 34 percent of banks.

For large banks, CRA service credit is awarded for holding the IDA accounts and investment credit is awarded for contributing match funds. About 80 percent of banks have been offering IDA accounts since 1998 and more than 70 percent of the credit unions began offering IDA accounts as of 200 Over 60 percent of the banks and two thirds of the credit unions that operate multiple locations offer IDA accounts at just one branch or office.

A few caveats about the responses deserve mention.

IDA proponents have identified various ways for financial institutions to contribute to IDA programs, spanning from servicing accounts to contributing operating funds.

Institutions with a mission or business strategy to serve distressed communities and target low-income individuals are relatively well represented in the sample.

Eighteen percent of banks and credit unions have a designation as a community development financial institution , a community development credit union or a low-income credit union .

Federal banking regulators granted CRA credit for a range of IDA-related activities including making grants to IDA programs, providing staff to participate in the development of IDA programs, and making loans to IDA holders.

Institutional Mission Most institutions qualify as “mainstream”-full service entities that provide a range of traditional banking services with no particular community development mandate.

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An ATM or Visa card for the account.