By and large, prison administrators and officials are terrified of prisoners who have any amount of money. They see external resources as a true security threat. In their minds, prisoners with outside resources pose a threat of bribing guards, funding internal drug rings, and even being crime bosses who might order hits, all from inside prison walls. Luckily for prison officials, most American prisoners lack any sort of resources to even make it to the prison’s commissary or to spend on telephone calls home, much less bribe a government official.
What is more likely is that a prisoner manages to either save up a few hundred dollars during a few years or a decade or so of incarceration, or is able to collect as much through gifts from family and friends. With this money, a prisoner can make significant strides toward establishing a strong financial future. The steps involved in this process are usually the basic ones: opening a bank account, obtaining credit reports, opening credit accounts, paying off credit card bills on time, and gradually saving more money and improving their credit in the process.
The problem is that almost none of these steps can be accomplished from a prison cell. Prisoners can’t go to a local bank branch and open a bank account (although some prison systems do allow prisoners to open bank accounts through local branch agreements). They can’t apply for a credit card online, and they can’t effectively pay their bills in a timely manner through the mail. Luckily, there are organizations specially positioned to handle these tasks and more for American prisoners.
One of the better known specialty organizations is Prisoner Assistant, a prisoner services company operated by Michael Benanti, a man who spent 16 years in federal prison for bank robbery, and who was recently profiled by the Wall Street Journal. Prisoner Assistant currently has around 300 clients in prisons across the United States and is even represented pro bono by the respected Chicago law firm Winston & Strawn LLP. Even Paul Wright, publisher of the venerable Prison Legal News, asserted that inmate banking and credit building services like Prisoner Assistant “help[s] prisoners when they get out.”
Because of Prisoner Assistant’s size, track record of success, and respect in the inmate banking industry, we will use them and their schedule of services to present a roadmap for how American prisoners can intelligently invest their money for the future.
Open a Bank Account
The first step to intelligently investing one’s money is to have a place to house it. This means a bank account. For prisoners, the problem is how to open an account if you can’t go to a bank branch in person or access the internet, or open an account through an arrangement between the prison and a local bank branch for such services. This problem is solved by inmate banking solution providers such as Prisoner Assistant. They start out by charging $4.50 for their very detailed, 67-page catalog, which showcases all of their 500+ services and company policies. This catalog contains not only a financial management agreement, but also a limited power of attorney and a social security number verification form. All of these must be notarized, something that can be done at any American prison. These documents are essential to opening a bank account and applying for credit cards and loans.
With these notarized forms in hand, the prisoner then returns the paperwork, along with a minimum initial deposit of $200. The staff at Prisoner Assistant then take these funds to a local Wells Fargo branch – one which they have an ongoing relationship with – and open a bank account in the inmate’s name. Prisoner Assistant charges $40 to open the account and then monthly fees ranging from $5 to $50 per month to manage this bank account and many other executive assistant services.
Once the bank account is open, the prisoner is then mailed the activation paperwork, a signed letter from the branch manager, and a greeting letter from their assigned executive assistant at Prisoner Assistant, who becomes the incarcerated client’s primary point of contact, the person who will help with all personal, banking, and investing needs.
Obtain Credit Reports
After the bank account (checking and/or savings) has been opened , the prisoner works with the executive assistant to obtain his or her credit reports from the three main credit reporting bureaus: Experian, TransUnion, and Equifax. This is an important phase since it helps prisoners to understand their credit health, or lack thereof. Prisoner Assistant charges $25 to pull the credit reports and mail them to the incarcerated client. The client can then opt for the monthly reporting service ($15 per month, plus $8 per request to Prisoner Assistant to print and mail a copy of the report) or to just pay $25 once a year to pull a new, free report from all three credit bureaus. This $25 is a Prisoner Assistant fee that covers their time and the expense of obtaining and mailing the credit reports.
After the prisoner has the credit reports in hand, it’s time to review them for accuracy. If any portion of the credit history is contested, the prisoner can relate this information to the executive assistant who can file a dispute on the prisoner’s behalf. Prisoner Assistant charges $2.75 per disputed item.
With the credit reports as clean as possible, it’s then time to look into building good credit so that when released from custody, a prisoner will have strong credit for obtaining housing, car loans, and so forth.
Apply for Credit Cards
Credit cards are essential in today’s world, but they can be challenging for a prisoner to obtain and can prove to be dangerous if not handled carefully. Prisoners need someone outside of prison to take responsibility for managing their credit cards for them. In fact, many prison systems do not allow prisoners to apply for or use credit cards. As such, a proxy is required – a responsible proxy such as Prisoner Assistant.
Prisoner Assistant helps incarcerated clients apply for unsecured and secured credit cards. They bill a fee of $40 to apply for any credit card, and $0.70 per minute to resubmit a denied application or troubleshoot if problems arise with the initial application. Since most prisoners have bad credit and very little income, they might have to apply for a secured credit card (a credit card where funds must be deposited prior to use). If this is the case, Prisoner Assistant recommends that prisoners deposit $300 on the secured credit card account. The secured credit card then carries an APR of approximately 19 percent and upwards of $50 in fees per year.
Most credit building experts suggest opening two credit card accounts: MasterCard and Visa. This way there are accounts of different types which can collectively be responsibly used. An additional bonus to having multiple lines of active credit is that they all report to the credit bureaus. As such, credit is built much faster.
It should be noted that in many jurisdictions, post-release parole or supervised release can carry prohibitions on entering into credit arrangements without permission of the probation officer (this is a standard condition of federal supervised release); there is no such prohibition applicable to those still in prison. The Prison Law Blog regularly reports on such supervised release policies and practices.
Pay Bills on Time
Once the credit card accounts are active, the incarcerated client can direct his or her executive assistant at Prisoner Assistant to use the credit card for any items required (school tuition, books, magazine or newspaper subscriptions, etc.). At the end of each month, Prisoner Assistant charges $6 to pay each credit card’s bill. They recommend paying two to three times the minimum amount and to never use above 50 percent of the available credit. These guidelines fall in line with the credit building industry’s best practices.
Obviously, using credit in this manner can be an expensive proposition. That’s why prisoners are advised to shift their existing expenses to their credit card accounts, not add on new expenses. That way the same expenses are being paid, but through a different, credit-building channel of payment.
Adding Loans into the Credit Building Mix
Loans can be very beneficial in a credit building portfolio, but are just as dangerous – if not more so – than credit cards. This is because of their potential for abuse and then owing additional monies due to having to repay a loan balance. Because of these risks, companies such as Prisoner Assistant only offer secured loan services. This way the risks are minimized, yet the benefits are still certainly there.
To apply for a secured loan, the prisoner’s executive assistant must go to the Wells Fargo branch and apply in person. Once the application is made, the executive assistant then deposits the full amount of the secured loan with the bank. For this Prisoner Assistant charges $50. While this seems like a self-defeating proposition – after all, the goal of a loan is usually to obtain needed funds which aren’t currently available – in the credit building process, it can be invaluable, irrespective of additional fees.
The Goal of Credit Building: Financial Security
As time goes on, more and more credit will be built. So, too, will the prisoner deposit more and more funds in his or her bank account. This revolving cycle to building credit and increasing the amount of funds in the prisoner’s bank account will be invaluable upon release from correctional custody. The better the prisoner’s credit becomes, and the more money in the bank, the stronger the financial position when it comes time to go home and rejoin regular American society.
Most prisoners are barred by prison regulations from investing their money either in prison or outside of prison (it tends to violate prison regulations barring prisoners from engaging in a business). And most prison systems don’t provide a meaningful mechanism for prisoners to open bank accounts and improve their credit. This is unfortunate because in this day and age, credit can either help someone succeed or act as a ceiling that prevents advancement.
But with the aid of prisoner services companies like Prisoner Assistant, prisoners can open bank accounts, obtain credit cards and secured loans, and pay their bills responsibly, thus building their credit and allowing them to be contributing members of society and their families. Who know, perhaps they’ll use this newfound good credit and the funds in their bank account to further their own education or that of their children upon release. Unless we provide a mechanism for this form of financial literacy, progress, and responsibility, we’ll never know.