By: Hemu Bhati
April 29, 2014
If you are one of the consumers without a bank account, then look at the options advisable in the market and how you can get banked.
It might sound strange, but there are millions of Americans with no bank affiliation. The good news is that most of them would like to get a bank account. According to a recent survey by the Federal Deposit Insurance Corp., one out of 12 homes in the U.S. carries no association with banks. Why would anyone want to live without a bank during these times?
When surveyed and questioned, many people said they didn't have a bank account because they think they don't need one. Another small percentage people said that they don't like dealing with banks. But most admitted that they would like to get a bank account.
Let us first take a look at the two reasons why the unbanked consumers can't get a bank account. First, for some people who live paycheck to paycheck, the banking infrastructure is too expensive to handle. Second, they could be denied accounts for other reasons, such as a poor ChexSystems report. That's how many people end up without a bank account and use cash or prepaid cards.
It is also interesting to note that even those who have a bank account are underbanked. About 51 million people supplement their finances with the help of pawnshops and payday lenders. Clearly, the world of alternative financial services isn't as dreadful as it is made out to be, and fees for cashing checks are relatively low. Fees for some prepaid cards also have become lower as banking fees have gone up.
The average fee to keep a checking account is $5.54 a month. The fees at financial institutions too have risen steadily for the past decade. The consumer might feel that the check-cashing and prepaid card services are very similar to maintaining a bank account. But mistakes can be very expensive. One can easily lose plenty of money.
What to Do If You Don't Want to Be Unbanked?
People without a bank account are often low-income and immigrant families. Their chances to get a bank account are slim, but the chances are not hopeless. If your transgressions aren't too serious, your odds are much better. The good news is that the banking industry has started showing much interest in this huge population of unbanked borrowers. They are finding ways to bring the unbanked into the financial mainstream.
Many large banks are offering very structured "second-chance checking" programs, with tighter limits on check writing and debit purchases. If you prove yourself as a proper customer, within a year, you progress to a traditional checking account. The newer online banks aren't as strict and selective about creative bank accounts. Their focus is mainly on building their deposits, and they are not too bothered about your credit history. But, ironically, unbanked consumers are getting prepaid cards from many banks.