As refund checks arrive, new tips and tools available to find low-cost banking options, avoid predatory products

DENVER – Find a low-cost banking account to deposit your checks in, pay off debt, avoid buy now, pay later schemes or financing large purchases that can leave you crash crunched, and take advantage of financial empowerment services offered in your community – those were the tips CoPIRG Foundation unveiled as many Coloradans decide what to do with the $750 state refund checks they received in the mail.

CoPIRG Foundation unveiled the new tips at Adelante Community Development’s office, where community members can receive financial empowerment education and skills. At the event, the Colorado Attorney General’s Office of Financial Empowerment (OFE) unveiled a list of twenty-three low-cost, low-fee bank accounts in Colorado as part of the Bank On Colorado program, which partners across sectors to connect residents to banking products certified to be safe and affordable.

“$750 can be a big boost for Colorado households but it’s important to avoid a set of pitfalls that can strip some of those dollars away or worse, trap you in debt down the road,” said Danny Katz, CoPIRG Foundation’s executive director. “From local community groups to the state’s Office of Financial Empowerment, there are resources to maximize your refund while minimizing debt traps. Because these are one-time dollars, make sure you prioritize paying off high interest loans first if possible, and be wary of buy now, pay later schemes or pitfalls around financing large purchases like a vehicle, which will put you in a cash crunch in a few months.”

According to the FDIC, approximately 3.3% of Coloradans are unbanked and 16.7% are underbanked. Unbanked or underbanked Coloradans may struggle to cash their refund check without being charged high fees. The Colorado OFE’s Bank On Colorado program, one of nearly 100 Bank On coalitions across the country, can help connect people to accounts without high fees. Bank On is supported by the national nonprofit Cities for Financial Empowerment Fund’s (CFE Fund’s) national Bank On initiative.

“Access to affordable banking services can help households reduce costly fees, access affordable credit options, and build household savings and wealth,” said Carmina Lass, director for the Office of Financial Empowerment. “The Colorado Department of Law’s Office of Financial Empowerment is thrilled to lead the development of Bank On Colorado, an emerging statewide coalition that will bring together cross-sector partners to expand access to safe, affordable, and nationally certified banking accounts.”

Beyond bank accounts, many community groups offer financial empowerment services that can help Coloradans maximize the impact of their refund check. For example, Adelante Community Development offers a number of programs including business fundamental classes, resource navigation services, QuickBooks training, and a food truck university.

“Spanish-speaking Latinos are traditionally left out of financial opportunities and here at Adelante Community Development we want to educate them to have access to the best financial vehicles that can support a better quality of life for their families,” said Maria Gonzalez, Founder & CEO Adelante Community Development.

CoPIRG Foundation staff also cautioned Coloradans to avoid purchasing large items through buy now, pay later programs or using other financing that could create a cash crunch in the future. For buy now, pay later (BNPL) programs, CoPIRG Foundation offered a set of tips including:

• Understand the way BNPL plans usually work. You’re often entering an agreement for the privilege of paying for something over as little as six weeks.
• Realize that some BNPL programs charge interest, although most don’t if you make your payments on time. If you’re late on a payment, some charge late fees. In some cases, you may have to pay interest not just for one month, but for the duration of the repayment period.
• Know that most BNPL programs often don’t report your dealings to the credit bureaus that determine your credit score. If you’re looking to build credit, there are better avenues, such as a secured credit card, rather than purchasing products with BNPL.

When it comes to purchasing a vehicle, there can be a number of pitfalls consumers should be on the lookout for including overpriced add ons and tactics like yo-yo financing. Check here for tips on how to avoid these pitfalls and more.