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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

#51

Post by steveklabnik »

rdtsc wrote: post #11

I can understand this. My mother in law was sick for a while and in a hospital for a few months. During that time she was late on one of her mortgage payments, which she as been faithfully paying for 2 decades. She also took an equity loan to remodel her house. Because of the missed payment they cancelled her equity loan. She went to the bank to talk to them hoping they would understand, but all he heard was how his…

> He kept hearing about how all these rules and triggers are automated in the "system" and nothing could be done.

This will ultimately be the downfall of 'computational governance.'

Re: The Real Reason The Poor Go Without Bank Accounts

#52

Post by dylz »

maxerickson wrote: post #9
Symmetry wrote: post #5

Earlier quoted context omitted.

What banks can do is pretty tightly regulated and I wonder if it would be legal for a bank to handle the overdraft situation in the aritcle the same way, with deducting a fee from checks cashed over time.

Banks have significant flexibility. Capital One 360 (the former ING Direct) handles overdrafts by providing a line of credit. The fees there for short term over drafts are a few cents.

I'm actually somewhat curious, why does CapitalOne fuck everyone in their "traditional banking" over, but generally not screw with [ex?] ING Direct customers?

Re: The Real Reason The Poor Go Without Bank Accounts

#53

Post by notahacker »

aptwebapps wrote: post #46
notahacker wrote: post #10

Earlier quoted context omitted.

Not having any paper trail to attract the attention of people and organizations you owe money to is arguably the only rational reason for being unbanked in an urban area of a developed country.

How about the reason given in TFA? If you're living on the edge, financially, cascading fees and fines from a single incident can cripple you.

The rational response to concerns about crippling fees is to choose an account without a minimum balance or with low overdraft fees, or preferably no overdraft facility at all. Sure, people living on a financial edge are often less well-informed than the general public when it comes to understanding fees, but it's probably rare for the optimal solution to be paying 2%[1] of your meagre income to the nice guys at RiteCheck, or 20% if you've cashed a bad cheque in the recent past... or eye-wateringly high fees if you actually need to borrow some money

Re: The Real Reason The Poor Go Without Bank Accounts

#54

Post by rdtsc »

teamonkey wrote: post #25
waterlesscloud wrote: post #21

Earlier quoted context omitted.

Stop banking with big banks. Go local. When my brother started his business, he moved all his banking to a local bank, one that had only one branch, which was downtown in his town. He's built a personal relationship with them, and the flexibility it's given him has paid off in spades over the year. There's no reason to pay some megacorporation to treat you impersonally.

Cost. If I bank with a large bank I can use their network of ATMs for free. With a smaller bank I can't withdraw anywhere other than my branch without incurring a ridiculous $3-$5 charge.

Some banks/credit unions/other places that offer checking accounts with bank cards will sometimes refund ATM fees.

Re: The Real Reason The Poor Go Without Bank Accounts

#55

Post by code_duck »

rwmj wrote: post #20
code_duck wrote: post #12

Earlier quoted context omitted.

I was talking to my girlfriend last night and she mentioned how her ex-boyfriend doesn't have a bank account. He's actually well off financially, so I wondered why. Indeed, the answer is to avoid wage garnishment for child support.

I wonder what the mother and child think of this arrangement?

I presume they wish the state had more effective means to redistribute the deadbeat's assets.

Re: The Real Reason The Poor Go Without Bank Accounts

#56

Post by RougeFemme »

I've never been with a traditional bank, even though I've always been able to afford it. I prefer credit unions. I can get all of the "bank-like" services that I need at a credit union and I have the satisfaction of knowing that I'm not further enriching a bank CEO.

Re: The Real Reason The Poor Go Without Bank Accounts

#57

Post by nullc »

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…

> but is a complete non-starter in my country where retail bank accounts with a positive balance usually are usually fee-free,

But not penalty free. A few months ago, I clicked a form twice in my online brokerage and accidentally doubled a ACH transfer from my bank account. Since I was transferring more than half, the double transaction was too much. My bank hit me with a $25 fee.

No big deal to me— but to many poor people a $25 fee could start a spiral of overdrafts which would leave them hopelessly short money. To someone in that situation an arrangement which charged them 5% per transaction would be preferable to one which carried any risk at all of an overdraft spiral of doom.

Re: The Real Reason The Poor Go Without Bank Accounts

#58

Post by idiot900 »

maxerickson wrote: post #9
Symmetry wrote: post #5

Earlier quoted context omitted.

What banks can do is pretty tightly regulated and I wonder if it would be legal for a bank to handle the overdraft situation in the aritcle the same way, with deducting a fee from checks cashed over time.

Banks have significant flexibility. Capital One 360 (the former ING Direct) handles overdrafts by providing a line of credit. The fees there for short term over drafts are a few cents.

dylz: Because the moment Capital One 360 started becoming predatory, I'd move my money out to another bank. So far they've been fine.

Re: The Real Reason The Poor Go Without Bank Accounts

#59

Post by belorn »

sebcat wrote: post #49
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 has not been my experience, ever. I only had "problems" with my bank once, that was when I was buying parachute equipment from France. The transfer went through, the bank contacted me and said "we have turned off international transfers from your account due to what we believe could be fraud committed by a third party". I contacted them, was told the cause of the "lock", said it was a legitimate transfer, they u…

Sorry, it was per week, not per month. Must have remembered wrong from last time I checked. Here is a good summery for most banks in Sweden: http://mfc.elmberg.net/2010/03/07/kontantuttag-vad-galler-fo...

The 8000kr per withdraw is for ATMs on the bank buildings. More common is those outside malls/shop, like ICA (http://www.swedbank.se/privat/kort-och-betalningar/kort/om-k...). However, I have seen some who increase those restrictions to half, so its a bit 50/50 if you get 1000 kr or 2000 kr (divide with 6.5 to get US dollar).

Re: The Real Reason The Poor Go Without Bank Accounts

#60

Post by naterator »

steveklabnik wrote: post #51
rdtsc wrote: post #11

I can understand this. My mother in law was sick for a while and in a hospital for a few months. During that time she was late on one of her mortgage payments, which she as been faithfully paying for 2 decades. She also took an equity loan to remodel her house. Because of the missed payment they cancelled her equity loan. She went to the bank to talk to them hoping they would understand, but all he heard was how his…

> He kept hearing about how all these rules and triggers are automated in the "system" and nothing could be done. This will ultimately be the downfall of 'computational governance.'

"Sorry sir, but the system clearly says you're to be executed next Tuesday. There's nothing I can do about it. Please choose your last meal carefully from the touchscreen."
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