The Real Reason The Poor Go Without Bank Accounts • Hacker News Board

Re: The Real Reason The Poor Go Without Bank Accounts

#141

Post by toomuchtodo » Sat, Sep 21, 2013, 9:57 PM UTC

notahacker wrote: post #28

cryptoz wrote: post #13

Earlier quoted context omitted.

I disagree very strongly with that. Here are a few rational reasons that someone may choose to not have their money in a bank: - Moral conflicts. Most banks use your money for purposes that many people consider evil, so choosing to not give them your money is a rational choice. - Lack of trust. Many banks over the last century have run out of money and been unable to honour withdrawal demands/requests. It's reasonabl…

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…

>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 don't recall the exact date, but within the last two weeks Marketplace on NPR had an interview with several financial executives about the 2008 collapse. One of the execs had his wife run to the ATM to withdraw the maximum limit ($500) when money market funds broke the buck, and even GE couldn't get short term funding. He was seriously concerned about the ability to get to his own funds.

Being in a developed country doesn't mean your money doesn't have any risk when tied up at an institution.

Re: The Real Reason The Poor Go Without Bank Accounts

#142

Post by dalke » Sat, Sep 21, 2013, 9:59 PM UTC

belorn wrote: post #119

dalke wrote: post #75

Earlier quoted context omitted.

"In Sweden, most ATMs is set at a maximum withdraw of 100$, while a few is set at $300." I think you did a conversion error from SEK to USD. Did you mean $1000 at a time? The documents you referenced say Swedbank has a max of 8 000 SEK/day, Nordea's is 5 000 SEK/day, SEB has 10 000 SEK/day, and so on. (Under-16s have a limit of 1 000 SEK/week.) That would correspond more to US$1,000 than $100. FWIW, I had a limit of…

The 8000 SEK/withdraw is only for ATM's located at the bank, and are been general dedicated to that banks customers. Bank ATMs has slowly been phased the last ~10 years with general ones (any custom of a bank can use them), and those has been spread out at malls and other similar places. Those however do not have an 8000 SEK withdraw limit, but rather around 1000-2000 SEK. ICA was one of the earlier adapters of those…

Hmm, somehow I forgot to include the ICA information in my previous reply.

http://www.swedbank.se/privat/kort-och-betalningar/kort/om-k... says you can take out up to 8 000:- per time, and up to 15 000:- in any 7 day period.

ICA's web site (just for reference, I have no real point here), at http://www.ica.se/ica-kort-bank/icas-kort/insattning-uttag/ says people with an ICA bank account can take out up to 3 000:- per occasion, and at most 15 000:- during a 4-day period.

You are right in that I didn't understand what your point was. Thank you for the clarification.

My updated point is that when I lived in the US I also had limits in what I could take from a bank machine. If I wanted to get more than that, I had to go to the bank itself.

You write: "If you want to withdraw more of your own money, you have to ask permission and give a reasonable explanation why one is taking out "that much cash". Only if the bank approves of your reasons to withdraw money will you be able to do so.", but what you've been pointing to have been bank machine limits, not cash withdraws.

It's not that I don't believe you. I know that Swedbank wants to get rid of dealing with cash. But do you have a reference for having to justify to the bank your need to withdraw the money?

As an extreme, and admittedly not likely case, what happens if they say "no" and you respond "I wish to close my accounts. Please give it to me in cash."?

(BTW, I live directly over a Swedbank, which makes it very easy to get to their own bank machine. :) )

Re: The Real Reason The Poor Go Without Bank Accounts

#143

Post by lostlogin » Sat, Sep 21, 2013, 9:59 PM UTC

Glyptodon wrote: post #76

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…

Even if you aren't poor, moving frequently or living on the road can cause you all kinds of problems with traditional institutions. So many things in our society rest on an unquestioned assumption that people 'live' in one place and don't move more than once a year and maintain a steady mailing address.

Exactly. My drivers license expired (the fact that could happen was news to me - law change came in after I got it) and I discovered this when trying to rent a small truck to move house. I went to renew it. They wanted 3 months of utility statement for the property I listed as my address. That's all well and good, but I didn't live there yet. I drove without a license for 3 months to meet their requirement. Then to cap it all off, at the appointment to get the license they wanted 2 forms of ID. As my old license had expired it wasn't valid, so I used my 2 passports. They seemed to think having 2 was illegal and called the police. Well done New Zealand Land Transport Authority. It was a pleasure.

Re: The Real Reason The Poor Go Without Bank Accounts

#144

Post by eli_gottlieb » Sat, Sep 21, 2013, 10:00 PM UTC

sliverstorm wrote: post #89

Glyptodon wrote: post #76

Earlier quoted context omitted.

Even if you aren't poor, moving frequently or living on the road can cause you all kinds of problems with traditional institutions. So many things in our society rest on an unquestioned assumption that people 'live' in one place and don't move more than once a year and maintain a steady mailing address.

Oh, I wouldn't say that's an assumption so much as a premise upon which services etc are offered, because the people who move every week are both a pain to support and not a significant portion of the population. In other words, all of this is not brought about by myopia, but simple business decisions.

There's a very large gap between "moves less than once per year" and "moves every week".

Hell, I'm having trouble keeping a steady place to live because I'm an intern in the Bay Area for 2 months at a time. Housing market is too hot for anyone to have offered rentals even loosely timed to what I needed.

Re: The Real Reason The Poor Go Without Bank Accounts

#145

Post by romaniv » Sat, Sep 21, 2013, 10:03 PM UTC

steveklabnik wrote: post #126

bilbo0s wrote: post #108

Earlier quoted context omitted.

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…

> (Ironically, a check that was bad because of the fee taken for 'a') This is a real big problem in these kinds of situations. To give you an idea of how this happens: when I was in college, I worked at a pizza shop. It was Thursday. I got paid Friday. I thought I had $20 in my bank account, but I didn't realize that day was the day that my World of Warcraft subscription was up, and that was $15. During the course of…

Did you know that this kind of reordering was intentional in some banks?

http://consumerist.com/2011/11/10/bofa-scraps-plan-to-let-cu...

Re: The Real Reason The Poor Go Without Bank Accounts

#146

Post by lostlogin » Sat, Sep 21, 2013, 10:03 PM UTC

Decade wrote: post #122

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…

3) "Free checking." And then, even if you (the low-income person) avoid the overdraft fees, eventually monthly fees start appearing. So far, in 10 years of using banks, I've twice closed checking accounts because they started charging monthly fees. I might try a credit union next time I need a bank account. Keep a $3000 minimum balance or have a regular job depositing money into your account electronically, and the m…

What the hell? Minimum balance? This practice is news to me. Is this effectively making zero into 3000? What happens if you dip below?

Re: The Real Reason The Poor Go Without Bank Accounts

#147

Post by easong » Sat, Sep 21, 2013, 10:03 PM UTC

sliverstorm wrote: post #89

Glyptodon wrote: post #76

Earlier quoted context omitted.

Even if you aren't poor, moving frequently or living on the road can cause you all kinds of problems with traditional institutions. So many things in our society rest on an unquestioned assumption that people 'live' in one place and don't move more than once a year and maintain a steady mailing address.

Oh, I wouldn't say that's an assumption so much as a premise upon which services etc are offered, because the people who move every week are both a pain to support and not a significant portion of the population. In other words, all of this is not brought about by myopia, but simple business decisions.

I moved around every month or two during college, because it allowed me to constantly lower my rent in a very expensive area, and saved thousands of dollars. I recently moved to Palo Alto for work, and got in a minor motorcycle accident that left my bike out of commission for several months.

Fully experiencing bay area traffic for the first time, I was pretty annoyed, so I went into 1. my national bank of multiple years, 2. a local credit union, and 3. The dealer itself to try to get a brief loan so I could get a nice sportbike. I make a decent salary, and have been working since I was 13.

Every single financial institution made me fill out my residence history for the past two years, which (on their paper forms) was a several hour process and a huge pain in the ass - why does it matter where I lived when I was eighteen? I'm not sure I remember the names of the people I was living with, much less the landlord's secondary phone number. It seemed especially pointless with my main bank, because they had full historical data on my salary, and knew damn well that I could pay off the loan in full with a month's salary.

Long story short, all of these places denied me for not having lived in the same house for multiple years. I waited a week, got a bonus, and bought one from a different dealer in cash. The next time I need a loan, you can bet I won't be going to any of the companies I visited previously.

It's ridiculous to make financial judgments based on length of residence at an address in 2013 when there's so much more accurate data available (actual income/purchasing data). I think this is a policy that's going to change - many if not most of my highest-earning peers move around frequently to meet needs of the modern job market.

Re: The Real Reason The Poor Go Without Bank Accounts

#148

Post by Karunamon » Sat, Sep 21, 2013, 10:09 PM UTC

lostlogin wrote: post #146

Decade wrote: post #122

Earlier quoted context omitted.

3) "Free checking." And then, even if you (the low-income person) avoid the overdraft fees, eventually monthly fees start appearing. So far, in 10 years of using banks, I've twice closed checking accounts because they started charging monthly fees. I might try a credit union next time I need a bank account. Keep a $3000 minimum balance or have a regular job depositing money into your account electronically, and the m…

What the hell? Minimum balance? This practice is news to me. Is this effectively making zero into 3000? What happens if you dip below?

Then they start charging "maintenance fees" on top of that. Thereby making the (completely manufactured and idiotic) problem even worse.

Re: The Real Reason The Poor Go Without Bank Accounts

#149

Post by sliverstorm » Sat, Sep 21, 2013, 10:11 PM UTC

easong wrote: post #147

sliverstorm wrote: post #89

Earlier quoted context omitted.

Oh, I wouldn't say that's an assumption so much as a premise upon which services etc are offered, because the people who move every week are both a pain to support and not a significant portion of the population. In other words, all of this is not brought about by myopia, but simple business decisions.

I moved around every month or two during college, because it allowed me to constantly lower my rent in a very expensive area, and saved thousands of dollars. I recently moved to Palo Alto for work, and got in a minor motorcycle accident that left my bike out of commission for several months. Fully experiencing bay area traffic for the first time, I was pretty annoyed, so I went into 1. my national bank of multiple ye…

I can only imagine they denied you because they were not confident they could find you if you defaulted, which is different from your risk of default.

Re: The Real Reason The Poor Go Without Bank Accounts

#150

Post by superuser2 » Sat, Sep 21, 2013, 10:15 PM UTC

bobf wrote: post #37

Geee wrote: post #33

Why is it exactly that online wire transfers aren't used in the US? As an European, I've not been in a bank since the 1990's, and never written or cashed a check. On the other hand, it's impossible to live without a bank account here. Your bank account is the only place you get paid to, whether it's salary or social security money. Also, you need it to pay your bills or transfer money to your friends.

Electronic ACH is often used in the US, which is basically the equivalent to an electronic check. Actual wire transfers usually have fees associated with them both to send and receive (~$25), and are thus more rare.

Not often. Harris Bank doesn't even let you initiate an ACH transfer from the website; you have to call or go in.

Much of Europe pays for POS transactions with free, fast bank transfers from their smartphones in lieu of credit and debit cards. No checking account, routing number, and 3 business day verification crap.