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Individual Development Accounts

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Individual Development Accounts (IDAs) are matched savings accounts that enable people with low incomes to save money and build assets.^[1] Every dollar that is saved in an IDA will be matched with donations from government agencies, non-profit organizations and private companies.^[2] Individual Development Accounts (IDAs) are emerging as one of the most promising tools to enable low-income and low-wealth American families to save, build assets, and enter the financial mainstream. IDAs reward the monthly savings of working-poor families who are trying to buy their first home, pay for post-secondary education, or start a small business. These matched savings accounts are similar to 401(k) plans and other matched savings accounts but can serve a broad range of purposes.^[3] Some of the key findings are that IDAs do lead the poor to save or acquire assets, but do not necessarily increase their net worth (assets minus debt). While costs are declining, IDAs are expensive to administer and are often used by the poor as checking and savings accounts as well as a means to accumulate wealth, reflecting in part the dearth of savings products aimed at the poor.^[4] North Carolina has one of the leading statewide networks of IDA programs with 32 local IDA sites in 55 North Carolina counties. These 32 programs provide matching funds and support to more than 500 low-income account holders.^[5] There is a four step process when acquiring an IDA, this includes; Introduction and Orientation, Opening Accounts, Economic Literacy and Training, and finally Withdrawal, Purchasing Assets and beyond.