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The Real Reason The Poor Go Without Bank Accounts

theatlanticcities.com

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Re: The Real Reason The Poor Go Without Bank Accounts

#131

Post by DanBC »

byuu wrote: post #130

When I was 19, I tried to open a checking account. Amazingly, I was declined. For a bank account. I didn't ask for credit, in fact I had no credit history at all. I was apparently so unworthy that they didn't trust me to give them my own money. I never understood that, as I figured they'd just bounce a check anyway if I lacked sufficient funds. I'm much older now, and have a bank account, mortgage, credit cards, and…

You didn't ask for credit. They make money by giving people credit. You wouldn't have made them any money.

You also didn't have any credit history. That's something that young people could be taught: "How to get a good credit rating, without being stupid and getting into tens of thousands of dollars of unpayable debt".

The UK has the concept of "basic bank accounts" which are needed so people can have state benefits paid to them. These accounts don't allow debt; don't have credit or debit cards. (Except HSBC I think does issue a debit card with its basic account and other banks probably do to?).

Re: The Real Reason The Poor Go Without Bank Accounts

#132

Post by kazagistar »

clarkm wrote: post #121
notahacker wrote: post #28

Earlier quoted context omitted.

Mistrust of banks' ability to honour withdrawal requests is largely irrational in a developed country given the existence of government-backed deposit insurance (and the much greater risk of having your cash stolen). I'd actually consider this to be the classic example of irrational mistrust based on a limited understanding of who actually loses out as a result of bank failures, and overconfidence in one's ability to…

Do you not consider Cyprus a developed country? Just a few months ago, many of its citizens had their deposits garnished, some at rates of 40%. How about Greece? There were talks of doing the same there.

Yes; the state failed to tax at high enough rates, and had to tax after the fact to pay of the debt they accumulated.

I guess if you want your money safe, store it somewhere that can do their finances properly?

Re: The Real Reason The Poor Go Without Bank Accounts

#134

Post by Decade »

patio11 wrote: post #40

Some reasons which are cited in the literature, of which there exists lots ( http://www.kansascityfed.org/publicat/research/community/Unb... is a good entry point): 1) Many poor people mistrust banks, for reasons ranging from cultural ("Where I come from, they're far more likely to vanish with your cash than the mattress") to personal experience ("I was just going about my business one day but then I ran the account…

1) Many people mistrust banks.

I also mistrust banks. Most banks are confusing and make it difficult to tell exactly how much money you can spend, and then lie in wait to hit you with overdraft fees. For now, I'm trying out Simple Bank, but they're in closed beta. I don't personally know anybody who wants to use the invitations that came with my account.

I'm also suspicious of "know your customer" laws and all that tracking information. I reduce the amount that they can know by keeping a small amount in cash, to use when shopping locally.

Re: The Real Reason The Poor Go Without Bank Accounts

#135

Post by rmc »

bilbo0s wrote: post #108
patio11 wrote: post #40

Some reasons which are cited in the literature, of which there exists lots ( http://www.kansascityfed.org/publicat/research/community/Unb... is a good entry point): 1) Many poor people mistrust banks, for reasons ranging from cultural ("Where I come from, they're far more likely to vanish with your cash than the mattress") to personal experience ("I was just going about my business one day but then I ran the account…

I only ever ASKED one poor person why they didn't have a bank account. A young mother of a student at a middle school I do work with. She has three kids and one month she was hit with fees for a) having less than a prescribed amount in her bank account. and b) writing a bad check. (Ironically, a check that was bad because of the fee taken for 'a'). Now for her, going to Walmart every month and putting her earnings on…

Because they only care about the ends, (feeding her kids). Not the means, (the bank account).

I don't like this ends/means thing here. I mean bank accounts aren't 'ethical things'. Not having a bank account isn't 'unethical'. In the context of money people only see accounts as an ends. Very few people have a bank account "just because".

Re: The Real Reason The Poor Go Without Bank Accounts

#136

Post by rmc »

moocowduckquack wrote: post #85
patio11 wrote: post #40

Some reasons which are cited in the literature, of which there exists lots ( http://www.kansascityfed.org/publicat/research/community/Unb... is a good entry point): 1) Many poor people mistrust banks, for reasons ranging from cultural ("Where I come from, they're far more likely to vanish with your cash than the mattress") to personal experience ("I was just going about my business one day but then I ran the account…

I'd say the 5th point is true in general, is just that money insulates you from the worst effects of many bad decisions and severe poverty can amplify them.

Having money gives you free mistakes. If you have very little money, then little mistakes can mean you have no money for food or accomodation. Then you start on the downward spiral. Having extra cash allows you to make the mistake without it ending your career.

Re: The Real Reason The Poor Go Without Bank Accounts

#137

Post by qwerta »

Maybe it is because the services sucks as well. American banks are decades behind Eastern Europe, Russia or even Africa.

Just basics: account where 'overdraft' is not possible (account can not go into minus). Debit with low (5%) interest can be arranged separately .

My bank had mobile banking in 1999 (simtoolkit & SMS). In 2002 mobile banking become free!

Credit card fraud? How about white-listing expected transactions over the internet? How about setting up your own filters?

Re: The Real Reason The Poor Go Without Bank Accounts

#138

Post by ilaksh »

Decade wrote: post #134
patio11 wrote: post #40

Some reasons which are cited in the literature, of which there exists lots ( http://www.kansascityfed.org/publicat/research/community/Unb... is a good entry point): 1) Many poor people mistrust banks, for reasons ranging from cultural ("Where I come from, they're far more likely to vanish with your cash than the mattress") to personal experience ("I was just going about my business one day but then I ran the account…

1) Many people mistrust banks. I also mistrust banks. Most banks are confusing and make it difficult to tell exactly how much money you can spend, and then lie in wait to hit you with overdraft fees. For now, I'm trying out Simple Bank, but they're in closed beta. I don't personally know anybody who wants to use the invitations that came with my account. I'm also suspicious of "know your customer" laws and all that t…

There are lawsuits out relating to accounting fraud. I know they have been caught reordering transactions to increase overdrafts. I have also experienced what seems to be deliberate delays in online reporting of transactions and even one case where a transaction somehow did not appear in the record until after I had withdrawn enough money several days later that this meant my account was suddenly overdrawn. They will also happily overdraw your account for an electronic transaction of $300 so that they can start collecting fees.

Re: The Real Reason The Poor Go Without Bank Accounts

#139

Post by brownbat »

sliverstorm wrote: post #110
capisce wrote: post #105

Earlier quoted context omitted.

A problem is when those big businesses prevent other smaller businesses from catering to the niche markets, through lobbying or other anti-competitive means.

Then combat the lobbying or other anti-competitive antics. The last time we tried to force business to operate in the wrong market, we told banks to lower their lending criteria and look where that got us.

> we told banks to lower their lending criteria and look where that got us

There's definitely a mix of opinions out there on this, but there have been some good challenges against community lending targets as a significant cause of the crisis.

Somewhat more polemical: 1. http://www.forbes.com/sites/stevedenning/2011/11/22/5086/ 2. http://www.washingtonpost.com/blogs/wonkblog/post/no-the-aff...

Wikipedia can sometimes provide a pretty good record on controversial topics with sufficient visibility.

The current article on causes of the US housing bubble, and specifically the section covering loan policy, cites useful literature on both sides. While it's not a completely one-sided argument, it appears the weight of the evidence goes against the CRA and similar government initiatives as a leading cause of the crisis: http://en.wikipedia.org/wiki/Causes_of_the_United_States_hou...

At the very least, given the number of other sections on that page, you should conclude that the CRA wasn't the sole cause of the crisis.

Note from the same page, (and in some of the above polemics), it seems like there's a similar cry to blame deregulation for the crisis. There are reputable economists, even Bill Clinton claiming that the repeal of Glass-Steagall probably wasn't sufficient to cause the crisis. Regulation and deregulation make suggestively convenient bogeymen for the right and left respectively, so they should draw a sort of heightened scrutiny.

Events like this are naturally complex. Alarm bells should ring if anyone boils down the entire crisis to something so simplistic as "too much or too little government." Some problems and some solutions don't fit conveniently on a postcard.

Re: The Real Reason The Poor Go Without Bank Accounts

#140

Post by foobarbazqux »

andrewflnr wrote: post #101
foobarbazqux wrote: post #95

Earlier quoted context omitted.

In a balanced society, the needs of businesses do not outweigh the needs of citizens.

Businesses are run by citizens, who have a right to choose which other citizens they're interested in serving.

Of course, but some businesses like banks are also run by the government.
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