Welfare,Work and Banking: The Use of Consumer Credit by Current and Former TANF Recipients in Charlotte,North Carolina

Abstract: Little is known about TANF recipients and leavers use of consumer credit. Using data from a 2001 North Carolina household survey of low‐income households, we analyze banking and credit behavior of current and recent welfare recipients in Charlotte, North Carolina. Other things equal, TANF families are 70% less likely than other low‐income families to have a bank account and much more likely to have participated in a credit counseling program. Except for more frequent contact with bill collectors and credit counselors, leavers are no different from other low income families struggling to make ends meet. Race also matters when it comes to accessing mainstream banking and credit systems. Targeted programs help TANF families gain greater access to the financial mainstream. When it comes to specialization programs, however, those involved in the welfare system are not very different from other poor families. However, by virtue of their formal involvement with TANF, this population can be more efficiently served than other low‐income populations. For this reason and the desire to keep families from recycling back onto welfare rolls, TANF programs should address banking and credit issues.