Many in U.S. Don't Have Bank Accounts

[Herman Munster]

http://biz.yahoo.com/ap/070623/bankless_in_america.html?.v=7

WASHINGTON (AP) -- Grandma stuffing money under the mattress isn't the only one living outside the banking system. As many as 28 million people in the United States are forgoing traditional financial institutions because of mistrust, cultural and language barriers or a belief that by the time all the bills are paid there will be nothing left for an account. That can be expensive and risky. People can run up big fees to cash checks, pay bills and meet their other financial needs. Walking around with large amounts of cash can make them a target for thieves.

The bankless are estimated to earn hundreds of billions of dollars a year in income. Seeing a business opportunity, banks are trying to draw in these potential customers. So, too, are check-cashing businesses and retailers, including Wal-Mart. Many people, however, still resist, preferring to remain in the financial shadows. They tend to be minority -- Hispanic or blacks especially -- as well as low income and young. According to the Federal Reserve, about one in 12 families -- 8.7 percent -- does not have a bank account. The number is higher for the poorest -- nearly a quarter of families earning less than $18,900, the Fed said, citing 2004 data.

For some, like Rosa Alvarez, the financial choices can be bewildering. "I don't understand about this bank stuff," says Alvarez, 54, who lives in Texas. A nagging fear that she might make a mistake "if I don't keep up with it right or something" keeps her from opening an account. She had one once, briefly. But she had trouble keeping track of her balance. She thinks that when the account closed, she owed the bank $12. Carlos Maren, 25, a cook, is afraid that if he opens a bank account in the U.S., he will get hit with fees for not keeping in enough money or for taking out more money than he has.

"My uncle sometimes says that it's expensive ... because if you don't have money in the account, (the bank) is going to be charging you," Maren says. Leonel Mendoza, 32, a hospital worker, is not comfortable with banks in this country. Both he and Maren do their financial transactions at a check-cashing outlet in the Adams Morgan neighborhood of Washington, D.C. They say it is convenient and they like knowing upfront what they will be charged to cash their paychecks, buy money orders, and, in Maren's case, wire money to his native Mexico. He has a bank account there.

"It's not real expensive," Maren says. Yet those charges can add up. A Consumer Federation of America survey of check-cashing outlets, found that on average it cost $24.45 to cash a $1,002 Social Security check last year. A blue-collar worker pays an average $19.66 every week to cash a $478.41 handwritten paper check. Having a bank account can be expensive, too, if it is not managed wisely. Failure to keep track of an account balance can incur a penalty of $20 to $35 each time a check is bounced or an account is overdrawn.

[BlooInBloo]

1. BECU offers 7.5% on the first $1000. Pretty sweet deal.

[SoCalDem]

2. I can understand why some do it..

Banks these days run credit checks and ask for all kinds of ID to open an account. We have 3 banks and a variety of accounts, but even I have kept cash sometimes.. I call it the National Bank of Mom.. My son appreciates it.. There have been times when he needed some cash and could only take out $500 from his ATM, so Mom comes up with the rest.. and when a car needs a repair, I have the cash on hand to pay for it.. (Our repair guy does not take checks..and we refuse to use credit cards :).)

Just last month my son needed to pick up some garage doors at 7AM, and the bank did not open til 10, so Mom gave him $1K so he could be on the road to havasu (where the jobsite was) and not have to drive in the super heat of the day..

When my mother died, I did not even cash in her insurance policy for almost 2 years because I did not want to fill out all the papers.. I think my siblings cashed in their share while the ink in the death certificate was still wet, but after begging me to cash my share in, the insurance company finally sent me a paper that required ONE signature and when the check came, I took it in cash.. The funny thing is that during the time I did not cash it in, it gained almost $1,500 in interest..

I had that cash for almost 4 years before I finally put it into CDs..

Never spent a penny of it either..:)

[BlooInBloo]

3. I've *never* had, or heard of a bank running a credit check as a prerequisite for opening an account

That would suck.

[Common Sense Party]

4. Nope. Me, either. n/t

[SoCalDem]

5. Most of the banks around here now use debit cards instead of ATM cards

and since they "can" be used as credit cards, they do a credit check..

Our accounts have no fees, but some people get stuck with all kinds of fees.. I even get a safety deposit box, travelers checks and money orders free, but many people do not.

[BlooInBloo]

6. Interesting. I have a debit card (MC), and went through no credit check...

... Guess there are regional differences.

[SoCalDem]

7. are you in Calif?

We've had our accounts forever, but when my friend opened a new account , they ran one on her..:( she passed with flying colors, but it pissed her off that they wanted HER credit info, when all she wanted was a damned checking account.

[BlooInBloo]

8. No, Seattle. That's why I said "regional differences".

[haele]

9. Banks will run credit checks for the better accounts -

Ones where you might not have a direct deposit set up to, or don't quite provide a certain minimal deposit to start the account, or accounts that have a credit line, overdraft, certain transaction fee waivers, or have interest accrual - the major banks in CA are notorious for doing this. Several of them won't even allow you to open an account without an unadvertised minimum deposit that depends on your credit score - the lower your score, the higher the deposit required.

I've also seen Credit Unions run credit checks for membership when trying to open up an account online.

And if you live paycheck to paycheck, there's always some fee that comes up that kicks you over limit to screw up your credit with the bank - something that never happens to those who are able to keep a cushion in their accounts.

Haele

[BlooInBloo]

10. I have minimum balance, overdraft protection, interest, and had no credit check.

[conscious evolution]

14. They do run them.

Got turned down from opening an account in two different banks because of sucky credit.

[ikojo]

17. Shoot, they run credit checks as part of the JOB

application process at many companies these days. I had to sign a form in 2001 allowing a health insurance company to which I applied for a job to run a credit check. Not having stellar credit I was concerned. I had already been told I had the job pending the "background check."

[treestar]

26. What's their reasoning for that?

You're trying to get a job to pay the bills!

[Akoto]

19. Bank of America ran a credit check on me for a basic online account.

I'm young and didn't have much built up in the way of credit history. If my father hadn't come aboard as a joint account holder, they wouldn't have given it to me!

I don't understand why they did it. The local bank allowed me to open an account with the same options, and all they needed was a state ID or license and other basic info.

[KatyaR]

24. Several years ago while I was going through 6 months of

devastating unemployment, my bank of 20 years closed my account because I didn't have any money in it. I only discovered this after I had finally started working and gotten my first direct deposit check. Guess what--they took the money but wouldn't give it to me because my account was closed. Jackasses . . . I had to go and get a cashier's check before I could do anything else.

When I went to a neighborhood bank, in a panic to open a new account because I needed my money so badly, the account person there told me that you can be denied an account if you have a "bad banking history." Because I had applied to open an account so quickly after the first one was closed, there was not enough time for my former bank to report on my "bad account," so I was able to open a new one. Otherwise, I probably would have been shit out of luck.

So apparently it's like renting an apartment--you have to have good references as well. What a crock of crap.

I had one small overdraft a while back, and now I found that the bank is allowing these to go through so they can charge you a $30 penalty as well as a $5/day charge until the overdraft is corrected, so they can make $60 or $70 bucks on a $5 overdraft.

How many people in this world can honestly say they have NEVER made a mistep, a mistake, an error or some kind? In this day and age, you're penalized for the slightest error, and companies are making a FORTUNE off the backs of folks like you and me.

I hate banks . . . .

[ikojo]

16. You are blessed if you have thousands laying

around to give your son $1k in the early AM.

Wow!

I'd be like your siblings, I'd have to cash any check I receive with the quickness because that money would be NEEDED.

I have friends who have no financial worries and yes, I am envious of them. One friend said her family is set for GENERATIONS. I cannot even begin to fathom that.

[Mythsaje]

11. Needing multiple IDs doesn't make it any easier...

Most banks require at least two pieces now. A driver's license and a credit card, usually. I had a credit card on a closed account that worked just fine. LOL. Otherwise I wouldn't have been able to get an account at all.

[no_hypocrisy]

12. If you don't have a lot of money, it's easy to understand why you wouldn't have a bank account.

First, a lot of banks demand a minimum deposit at all times; otherwise a fee will be imposed. Say you have $999.99 versus $1,0000 in your account, each month, say $5.00 will be deducted and you're losing money while not spending it. And a lot of people just don't have the luxury of putting a certain amount on ice for the sake of a minimum deposit. They need the money to survive.

Second, fees for cashing checks. I had a friend who deposited a check but it the funds weren't available for 72 hours. The money was there but he couldn't use it. He wrote 10 checks against the aggregate but didn't count on the payees cashing the checks within the 72 hours (he thought the money would be ready by the time they went to the bank). The bank bounced each check and imposed a $35.00 fee for each one ($350) AND then proceeded to automatically attempt to cash the checks once again WITHIN THE SAME BANKING DAY -- and yep, another $350 added to the other $350. So this guy lost $700 on top of the funds he deposited.

ATM machines charge hefty fees for using them.

I can see why people use U.S. Postal Money Orders and cash versus a bank if they don't have a lot to protect to begin with.

[Solon]

13. I abandoned banks when I found out they don't know how to deposit paychecks...

I worked for major employers(one the LARGEST in the country, outside of the Government), and yet it would take up to 2 weeks to have ONE damned paycheck go through at the bank. I switched banks a few times because of this, and one, I think, just tried to confuse me. They were random in how the checks are counted in my account, if I deposit it on a Friday, I may have access to 1/3, 1/2, or as low as 1/4th of the check for the weekend or an entire week afterwards. As far as I can tell, it was completely random, and varied from month to month. Imagine the amount of bounced checks I had when I tried paying my bills! Also, don't get me started on the check card daily spending limit security "feature".

This is part of the reason why I refuse to get either a checking account or a credit card, at least, in the case of the checking accounts, its an actual contract I can somewhat understand, credit cards are literally a blank check for abuse of customers. I would never sign a contract with anyone, not even my own mother, when they can change the terms of the contract at will, without my knowledge or consent.

[SheilaT]

18. Direct payroll deposit.

Lots of companies use them these days. some companies do nothing else. With direct deposit the money is fully available as soon as the electronic transfer is made.

About twelve or fourteen years ago my husband was working for a smallish company (I think about forty employees) that was switching from paychecks distributed at the workplace to direct deposit. Several people quit rather than have a checking account.

I'm under the vague impression that social security checks have gone entirely to direct deposit. Does anyone know about that?

[Solon]

20. At the time(10 years ago), direct deposit was for salaried employees...

i.e. managers, us hourly employees were cut a check. It wasn't until later that we were given the option of direct deposit, and I jumped on that like a fly on shit.

Pretty much anytime I enter any bank, I think the employees there just see a big ass sign on my back that says "Screw Me". This goes for utilities, landlords, credit card companies, cell phone companies, and most of my employers(except 1). By the way, my credit sucks, and I never owed a dime in my life that I didn't pay back promptly. This includes paying off 2 cars early, a student loan early, and never being so much as a day late on rent.

[SheilaT]

22. If you're paying off

debt early, you should have good credit. Credit card companies won't like you very much because you won't pay them interest, but they've solved that problem nicely by simply tacking on various fees. An American Express Credit card, which does charge a yearly fee, does not charge interest because the assumption is that you pay the balance each month. It's not as widely accepted as Visa or Master Card, but seems to give the best exchange rates when used over seas.

I've often been puzzled by apparently middle-class people who swear they don't have and never will have any credit cards. There are certain things that you absolutely must have a credit card for, such as renting cars. But I do realize we all have somewhat different lifestyles.

[Solon]

25. Well, given my experience, I definately do NOT want a credit card...

EVER! That's the last thing I'll need, I can just see it now, they will misplace my payments, charge me up the wazoo, and I'll have to file bankruptcy. Right now the only outstanding debt I have that I never made, the Gas Company around here is charging me 800 bucks in non-payments for living in an apartment for 6 months longer than I actually lived there. I gave them my lease, told them THEY made a mistake, that I took my name off the utility and paid the last bill, and the only response from them is that I should call the police because someone stole my identity! I guess they want me to send my own ass to jail for filing a false report, I don't know.

[ikojo]

15. How many of those folks live in an area underserved by

banks. There aren't a lot of banks in North St Louis that's for sure, nothing like what is seen in wealthy suburban West St Louis County.

Also, banks eat at your money with all these fees they charge. It is difficult for the average working person to keep a set amount of money in his/her checking account in order avoid fees.

[1932]

21. Half of Americans havea negative net worth, and spend more than they make.

[Hubert Flottz]

23. They got tired of the statements not being delivered under the

bridge where they live, now that their job is in India.