CalAccount: Building on California’s Financial Services Track Record - Nari Rhee, Ph.D.

To begin, CalAccount would offer a “a voluntary, zero-fee, zero-penalty, federally insured transaction account … and related payment services at no cost to accountholders” to address the needs of low-income Californians who currently lack access to affordable consumer banking services.1 A publicly appointed board of trustees and the STO would select a private financial service provider to administ. [...] The main difference is that the three existing programs are investment-oriented and pass on the cost of account administration and money management to account holders through fees, while CalAccounts would be a free consumer banking product. [...] The federal ABLE Act, signed by President Obama in 2014, increased the amount of money that people who become disabled before age 26 could save and invest without losing their federal disability and Medicaid benefits.8 The CalABLE program was established in 2016 by the state to ensure that disabled Californians can save for their future. [...] The program charges a $30 annual fee, plus low fees on investment options that generally range from 0.28% to 0.45%.9 CalAccount: Building on California’s Financial Services Track Record • page 3 — California can build on the success and lessons of ScholarShare, CalSavers, and CalABLE to provide affordable consumer banking services that meet the needs of economically marginalized communities throug. [...] The analyses, interpretations, conclusions, and views expressed in this brief are those of the author and do not necessarily represent the UC Berkeley Labor Center, the Regents of the University of California, or collaborating organizations or funders.