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The Real Reason The Poor Go Without Bank Accounts

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Re: The Real Reason The Poor Go Without Bank Accounts

#191

Post by eriksank »

morgante wrote: post #151
r0s wrote: post #112

Earlier quoted context omitted.

> I've never in my life been charged an overdraft fee because it doesn't take much to just track the payments you make and never go over. That's easy to do if you're not poor. It's a problem you've never encountered, so don't pretend your virtue protects you. Obviously 'punishing' those with no money does nothing. It certainly doesn't prevent overdrafts. The only sane response to this (correctly identified) cycle of…

> That's easy to do if you're not poor. It's a problem you've never encountered, so don't pretend your virtue protects you. I didn't always have money. My father is a carpenter, and I definitely took the time to write down every expense back when there was serious risk I might overdraft. However, I must apologize for phrasing my original comment too harshly. People don't deserve poverty, but what I meant was that the…

Life itself may not go according to plan. Not everybody is a civil servant safely working for an otherwise over-indebted local city council. Other people could get fired from their jobs, the company could have packed their bags and moved to China, or their own business could have gone bust, and so on. Whatever happened, in those circumstances, the fact of having money in the bank does not help, because they will just arraign that money too. More often than not, related to what happened in your life, they will just seize the balance. And now you can no longer pay for the rent nor the food. So, you may end up homeless in the streets, unless somebody helps you. That is why I do not save money in the country that I happen to live in. It is much harder to attack a foreign bank account -- how can anybody know it even exists -- than a local bank account. So, I never trust local bank accounts. Whenever things go wrong, that thing will inevitably go wrong too.

Re: The Real Reason The Poor Go Without Bank Accounts

#192

Post by gambiting »

belorn wrote: post #31

While the alternative financial service providers is taking the road of improved customer service, the banks are going the other way. In Sweden, most ATMs is set at a maximum withdraw of 100$, while a few is set at $300. The bank itself also adds additional restriction of maximum $2000 per week. If you want to withdraw more of your own money, you have to ask permission and give a reasonable explanation why one is tak…

That is obscene. With my bank in Poland I can set any limit I like, directly through their website, and never had a problem with withdrawing even very large amounts of money.

Also, I would never open an account that is not 100% free to run. I anything happens, I don't want my account to be eating into my savings. So far, I am successful - my current account doesn't cost anything to run, there are absolutely no fees for withdrawing money at ATMS, and my Visa card costs $0.50 per month,but only if I don't use it to make at least $30 of payments each month,which I always do. So I never pay any fees.

Re: The Real Reason The Poor Go Without Bank Accounts

#193

Post by gambiting »

dalke wrote: post #75
belorn wrote: post #31

While the alternative financial service providers is taking the road of improved customer service, the banks are going the other way. In Sweden, most ATMs is set at a maximum withdraw of 100$, while a few is set at $300. The bank itself also adds additional restriction of maximum $2000 per week. If you want to withdraw more of your own money, you have to ask permission and give a reasonable explanation why one is tak…

"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…

I just don't understand why you would even have a daily withdrawal limit. As soon as I opened my account I set mine to something silly like $10k per day so I would never have a problem with withdrawing money if I need it.

Re: The Real Reason The Poor Go Without Bank Accounts

#194

Post by gambiting »

DanBC wrote: post #131
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…

I have a bank account with Santander in the UK. The account doesn't have overdraft(I specifically said I don't want one) and I was also given a Visa Debit card with it. It is silly that I have to pay fees for it(5 pounds ~ $7), but as far as I am aware no bank in the UK offers account that don't cost any money to run, which I personally don't understand.

Re: The Real Reason The Poor Go Without Bank Accounts

#195

Post by mattm »

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…

> I didn't realize that day was the day that my World of Warcraft subscription was up

I no longer allow any automatic payments from my bank account because of this issue. Maybe one is ok but if you start to have 5 or 6 monthly payments automatically coming out of your bank account, it can be hard to keep track.

Also, if they make an error and you are dealing with a large company, it is probably going to take months to get the money back whereas paying invoices leaves me in control and I can choose not to pay if something is wrong.

If I do have a subscription, it just goes on my credit card and then I pay at my convenience. This also allows me a buffer in case of any unexpected emergencies should I need some extra cash flow. I could pay the minimum monthly amount for a month or two should I need it.

I really don't know why people do this. Let's let some large company have direct access to debit my account at will.

(Sorry for the tangent but I feel strongly about this)

Re: The Real Reason The Poor Go Without Bank Accounts

#196

Post by millstone »

dobbsbob wrote: post #168
steveklabnik wrote: post #126

Earlier quoted context omitted.

> (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…

When I was a student I was broke, and lived off a tiny income of $800 a month for food. I bought a 3G mobile stick which didn't work, and immediately returned it the next day and cancelled the service. Of course, they never cancelled service so a year later I get collection phonecalls that I owe them $1,000. Regardless of me disputing the bill they instead debited my bank -$1,000 which I had no idea they could do sin…

What a distressing story. The collection agencies are happy to pick on those who do not have the resources to defend themselves. The bank is happy to let your balance go negative, because it permits them to rack up fees. The interests of the customer (you) do not even register as a footnote.

Good on you for closing that account, and clawing your way back to solvency. One day you'll be wealthy, and that same bank will come a-knockin'. Tell them to go pound sand.

Re: The Real Reason The Poor Go Without Bank Accounts

#197

Post by gambiting »

rm445 wrote: post #34

This article has a lot of fluff and before getting to the point. It just seems unlikely that the success of these shops that provide expensive financial services to poor people is all down to the human touch. I see friendliness in the report but not much in the way of personalised service (just the lady with the payment plan). The benefits of paying a percentage to get your money a couple of days earlier are clear en…

I have a bank account in Poland,and the account is 1) free to run,no monthly fees 2) cards are free if you spend at least $30 per month, otherwise it is $0.50 per card,per month 3) there is no overdraft(unless you specifically ask for it, I didn't) 4) nobody uses checks,so "unarranged overdraft" is virtually unheard of, I only once went "under" when I sent a large sum abroad, but then a few days later when the money actually left my account the price of euro changed and I was charged slightly more, putting me a few Zlotys under zero. I just quickly paid in some money to my account and there was no fee for that.

So how does the bank make money off me? It must be by investing the money they keep for their customers,because I certainly am not paying them anything. I've had an account with them for the last 5 years, and paid exactly $0 in fees.

Re: The Real Reason The Poor Go Without Bank Accounts

#198

Post by millstone »

dizzystar wrote: post #171
steveklabnik wrote: post #126

Earlier quoted context omitted.

> (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…

Came here to post something on the order of this. One time I was nailed for > $250 and the correct ordering would have been only one overdraft for about 30cents and a penalty of $35. I was working at a min-wage job at the time and taking home less than $200/week. I lost over a week and a half of pay to the bank, couldn't afford to pay rent and had to leave my place. I got slammed less than two weeks later and that pr…

Dealing in cash is an excellent choice. Not only do you avoid getting screwed by banks, you experience the gut-churning visceral reaction of handing over a Benji - something you just don't get with a credit card swipe. So it's a financial and psychological win. That's why Dave Ramsey advocates for it (plenty to critique about the guy, but he nails that part).

The stupidity comes from the wretched check cashing agencies (aka liquor stores). Pay us for access to your money, minus 3% for our trouble. What a racket!

Re: The Real Reason The Poor Go Without Bank Accounts

#199

Post by smm2000 »

aperture wrote: post #27

Currently, I'm interning at a well known banking wealth management company, and I find the rich like to have the same environment. Birthday cards, get well soon cards, calling the client and asking how they are, helping them with last minute account stuff (like making their visa have a higher cap so that cruise trip can be insured). I think a lot of banking should be like this. I doubt it ever could be, as most banks…

I think that most middle class people just do not need any personal services. I understand why rich need it - they have complex finances with multiple sources of income, bank accounts in different countries, tax management needs etc. Poor also may need it - bounced checks, cashflow problems, lack of understanding of financial products.

But finances for most middle-class people are plain vanilla - one or two checking accounts, credit card, simple mortgage. They do not live paycheck to paycheck so no bounced checks. There is not much space for personal interactions, especially profitable ones. Get paycheck every two weeks, pay all the bills, move whatever left to investment account. The last time I was in the bank was three years ago to do international wire transfer.

Good analogy - when I was poor student with crappy car that was constantly broken, mechanic was important person in my life. Car repair expenses in some months were bigger than my monthly budget and having rapport with good mechanic was important. Now I have newer car that pretty much never breaks and I do not give a damn who changes my oil as long as there is Starbucks nearby.

Re: The Real Reason The Poor Go Without Bank Accounts

#200

Post by andy_boot »

mattm wrote: post #195
steveklabnik wrote: post #126

Earlier quoted context omitted.

> (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…

> I didn't realize that day was the day that my World of Warcraft subscription was up I no longer allow any automatic payments from my bank account because of this issue. Maybe one is ok but if you start to have 5 or 6 monthly payments automatically coming out of your bank account, it can be hard to keep track. Also, if they make an error and you are dealing with a large company, it is probably going to take months t…

Make sure all your payments come out on the first of the month. This way it's easier to keep track.
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