Banks have been continually inventing and raising fees on unsuspecting middle-class customers for decades. I wouldn't be surprised if banks made more fee revenue per customer than check cashers.
The Real Reason The Poor Go Without Bank Accounts
61–70 of 232 posts
Re: The Real Reason The Poor Go Without Bank Accounts
#62Don't forget that in poor areas, there aren't many banks. When you're in the suburbs there's a bank on every corner. Even trying to find an ATM in the part of town I work in can be a challenge. They recently built one and it has so many lights an mirrors around it, it seems a bit silly.
I'm not sure what the banks use to determine whether they open/close a certain branch. Everyone jokes that 'The First National on MLK Boulevard got robbed twice a month so they shut it down', but I'm sure there's some real process with population density and more importantly, income density.
When you cash your check at a liquor store, two things happen - you end up buying things like food for your family (as well as beer + cigarettes + lotto) and they take a % cut. The bank doesn't have anything for you to buy and they don't take a cut.
This also means the poor can't pay their bills online. Again, in the bad side of town on Fridays and on the 1st and 14th of the month, there are massive lines outside the power company, city water department, and cable company. Everyone's standing there waiting to pay their bill in cash. While the rest of us pay everything from our smartphone or have it directly taken out of our accounts, they're spending two hours in line during the day.
Re: The Real Reason The Poor Go Without Bank Accounts
#63When I read an article like this, I'm always amazed that more people haven't discovered credit unions. Most of the objections that the article raises about "banks" are objections that I have too, except that they're really about "big (multi-)national banks". My experiences with credit unions have been much more in line with what the author describes about the check-cashers. On one occasion there was an incident involving a mis-typed amount in an online transfer, basically all my fault, but everybody was on my side and it got resolved quickly and easily---and all over the phone, as I was several thousand miles away from home at the time!
Re: The Real Reason The Poor Go Without Bank Accounts
#64Earlier quoted context omitted.
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 Rite…
That may be a rational response, but you need better support for the suggestion that no other possible response is rational.
Re: The Real Reason The Poor Go Without Bank Accounts
#65Earlier quoted context omitted.
I assume this is talking about child support payments ordered during divorce proceedings?
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.
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Re: The Real Reason The Poor Go Without Bank Accounts
#66Why 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.
I once was attempting to receive a wire transfer from a company for some consulting work I did. After failing to complete the transaction a few times, I found out that the credit union I'd kept my checking account at for years didn't even have the ability to accept the kind of wire transfer that was being sent. I had to create a one-off savings account at a bank to handle the transaction.
Perhaps that has something to do with it.
Re: The Real Reason The Poor Go Without Bank Accounts
#67Some 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…
This is an astoundingly good response. Kudos.
Re: The Real Reason The Poor Go Without Bank Accounts
#68Earlier quoted context omitted.
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 Rite…
Basic bank accounts, i.e. the sort without credit, are very under publicised - and the bank staff don't, last I checked, have to tell you they exist.
Re: The Real Reason The Poor Go Without Bank Accounts
#69This 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 agree with your analysis of overdraft fees however what you take to be fluff and not greeting to the point, others may interpret as good writing, or at least a more verbose style than we in the modern tech sector are used to. I thought it was a colorful and well-written article that while anecdotal (plural != data!) effectively conveyed the conclusions this author, who is putatively an expert in the field.
I love verbose writing, but only if it's purposeful and spare:)
If there's a reason to tell me the color of her shoes, I'd love to hear about the color of her shoes. I don't want to hear about the color of everything in the room, though.
Re: The Real Reason The Poor Go Without Bank Accounts
#70While 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 the U.S. you don't have to give a reason for taking out your cash (though withdrawals over a certain amount are reported to the Feds). But there are ATM limits. I always assumed - perhaps naively - that the reason was to keep the ATM from running out of cash too quickly, thus minimizing the cost of replenishing them. And occasionally, on 3-day weekends, I have seen more out-of-order ATMS than usual. . .presumably…
Recall a recent hack/heist re ATM withdrawal limits:
http://www.pcmag.com/article2/0,2817,2418841,00.asp
"The elimination of withdrawal limits enables the participants to withdraw literally unlimited amounts of cash until the operation is shut down," the U.S. attorney's office said.