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The Real Reason The Poor Go Without Bank Accounts

279 pointsby sfrjayover 11 years ago

32 comments

gregpillingover 11 years ago
This comment on the article reflects why many people that I have met personally do not have checking accounts or bank accounts. They are worried about having money seized.<p>From the comment section of the article -<i>&quot;If you would really like to know why poor people regular these establishments I&#x27;ll tell you why: it&#x27;s because they keep you off the grid. I used to have a checking account too all my life. But after I lost my job, even though I&#x27;m a fulltime single father, the &quot;child extort&quot; kidnappers levied my checking account several times. They just took money at will no questions asked. There was no rules stopping them and nothing I could do. The Sheriff of Nottingham might as well been barging in me and my daughters tiny apartment and stealing all of our shillings. So after the &quot;child extort&quot; agency did this 3 times, I shut down the account. And from that moment forward I just began to live off the grid using cash and money orders. &quot;</i>
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Amadouover 11 years ago
This article validates one my key beefs with &quot;big data&quot; - databases (like chexsystems in the article) remove slack from the system. Humans need slack and only humans can provide slack.<p>In the short term that may seem like a good idea, removing slack appears to increase efficiency. But in the long run it is socially destructive -- we are all people, not just numbers and reducing us to numbers ignores much of the realities of life. When you can&#x27;t take into account the realities of life, then the imperfect systems that the databases model as perfect fall apart.
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belornover 11 years ago
While the alternative financial service providers is taking the road of improved customer service, the banks are going the other way.<p>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 taking out <i>&quot;that much cash&quot;</i>. Only if the bank approves of your reasons to withdraw money will you be able to do so.<p>All withdraws are of course logged, stored, traded and given away for inspection. I can also be held, for any reason the bank can think of or from outside pressure (like the Wikileaks visa scandal).<p>I fully understand why more and more people chose to avoid banks. Banks are services. If you voluntary give away your money to be owned and controlled by a third-party, they will indeed do so.<p><i>corrected: month -&gt; week</i>
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jlgaddisover 11 years ago
A friend of mine works at a gas station in my hometown (a fairly low-income, rural city, pop. ~4600). After seeing him post Facebook statuses such as &quot;Oh boy, it&#x27;s the 31st and I get to work tonight&quot; (in a sarcastic tone) a few times, I asked him about it.<p>He tells me that on the last day of every month, there are a number of people who come to the gas station starting as early as 9 p.m. and simply &quot;hang out&quot;. They wander in and out of the store but mostly linger in the parking lot, chatting with others in their large group, and simply trying to entertain themselves, in general.<p>Naturally, I asked him why they would do this. Apparently their government &quot;checks&quot; are now &quot;deposited onto their card&quot; (a debit card, basically) at exactly midnight on the 1st of every month. They know that at 12:01 a.m. on the 1st, their money will be available and so they hang out at the gas station in anticipation of being able to load up on cigarettes, basic groceries (more expensive than a typical grocery store, of course), lottery tickets, and such.
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rayinerover 11 years ago
I&#x27;d imagine another reason is they need the certainty of having their money be there. My wife had an account she didn&#x27;t use since college, and apparently she fell below a balance limit and they charged a $5 fee, which overdraw her and turned into a $35 overdraft charge. Inconvenient for us, potentially a disaster for someone scraping by.
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Geeeover 11 years ago
Why is it exactly that online wire transfers aren&#x27;t used in the US? As an European, I&#x27;ve not been in a bank since the 1990&#x27;s, and never written or cashed a check. On the other hand, it&#x27;s impossible to live without a bank account here. Your bank account is the only place you get paid to, whether it&#x27;s salary or social security money. Also, you need it to pay your bills or transfer money to your friends.
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patio11over 11 years ago
Some reasons which are cited in the literature, of which there exists lots (<a href="http://www.kansascityfed.org/publicat/research/community/Unbanked.Report.pdf" rel="nofollow">http:&#x2F;&#x2F;www.kansascityfed.org&#x2F;publicat&#x2F;research&#x2F;community&#x2F;Unb...</a> is a good entry point):<p>1) Many poor people mistrust banks, for reasons ranging from cultural (&quot;Where I come from, they&#x27;re far more likely to vanish with your cash than the mattress&quot;) to personal experience (&quot;I was just going about my business one day but then I ran the account a little low, $300 vanished in fees, my rent check bounced and I <i>got arrested</i> for &#x27;uttering.&#x27;&quot;).<p>2) Banks have some assumptions made about their customers which are institutionalized by practice and sometimes regulation or policy. These assumptions map fairly well to the middle class but sometimes don&#x27;t travel well. Here&#x27;s four things I could tell you about an adult member of the middle class: they&#x27;re literate, have a primary address which changes relatively infrequently, carry identification with them, and do not fear speaking to Authority because they&#x27;re not cognizant of a reason why that should result in their immediate arrest.<p>3) &quot;Free checking&quot; was a multi-billion dollar ongoing wealth transfer from poor bank customers to banks and relatively wealthier bank customers. (&quot;Free checking&quot; was a marketing tactic very popular in the 90s and early 2000s where banks eliminated monthly fees for checking accounts while slashing minimum balances to open them. The flipside is that they then started cranking up fees generated by e.g. overdrafts. This combination generally tends to not be to the benefit of (many) poor people.)<p>4) The alternative financial sector has a product mix which more closely matches poor people&#x27;s needs than traditional banks. For example, short-term loans for small amounts of money available with minimal documentation required are a) astoundingly high risk, b) relatively expensive to process, c) have fairly low margins, and d) carry explosive reputational risk. These counsel against the typical retail bank even trying to offer them. Much better to loan a middle class American $8k out of a credit card limit of $20k at 12% with a 3% loss rate then to loan a poor person $100 with $110 due a week later. (If you APR-ize that it becomes &quot;A number which one never, ever wants to get asked about when you&#x27;re called to testify before Congress about how you&#x27;re causing poverty in the community you serve.&quot;) Business thus flows to the alternative financial sector.<p>5) (The literature is a bit circumspect about this one, but it&#x27;s there.) Sometimes poor people make decisions which, if you appreciated their limited options, individualized viewpoints of the world, and the sociocultural context and structural issues at play... are still very effing bad decisions.
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sdolan805over 11 years ago
My friend had $150k in his bank account that was taken by the IRS while they were still in negotiations on a huge tax bill. No notification, no nothing. He only found out after he was trying to buy groceries and his card was declined.<p>After it was all said and done he ended up owing the IRS ~$14k and they gave him a check for the difference, but it took months to get it all sorted out.<p>I lent him some money to get him through it, but what if he didn&#x27;t have a friend to do that? He&#x27;d be kicked out of his apartment and starving.<p>Now he doesn&#x27;t trust banks (not that it&#x27;s the necessarily the banks fault). He keeps around a thousand in his bank for emergencies, and keeps the rest in cash (at an undisclosed location :)).<p>It goes to show that even people with a reasonable amount of money have reasons to keep their money out of banks.
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rdtscover 11 years ago
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 &quot;hands were tied&quot;. She tried telling them she was a customer for years, she had a number of accounts with them, mortgages, car loans from the past, she even paid extra on her mortgage payments often. She explained her medical condition hoping they would understand, but all to no avail. He kept hearing about how all these rules and triggers are automated in the &quot;system&quot; and nothing could be done.<p>She lamented the time when banking was a personal experience just like the article wrote. You went your teller, you&#x27;d known for years, they&#x27;d ask about your kids. The manager migth know you, might send you a birthday card and so on. I can see how she would be a person willing to pay $5 per check just to get back that personal touch.<p>The article also touched on this, but many people who are poor also don&#x27;t happen to see a lot of human kindness, sometimes fake customer service kindness is better than nothing, they don&#x27;t even mind paying extra to get it.
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saurikover 11 years ago
I am not buying this; I agree that poor people not using banks is an issue, and I appreciate a number of interesting reasons why this is the case (the list iterated by patio11&#x27;s comment is amazing): I do not, however, think it is because banks are turning into impersonal institutions with which you never interact with a person.<p>Sure: this author doesn&#x27;t generally interact with her bank. She doesn&#x27;t see the need to, so she isn&#x27;t choosing to; but, the bank she is using does have a branch she went to, and if she actually went there at all often the people there would get to know her. The building might be &quot;impersonal&quot;, but the people are still people.<p>This doesn&#x27;t even just apply to small banks (a friend of mine has always used local banks): I use the Bank of America, and almost everyone at my local branch knows me because I go there often and actually talk to them. I seriously look forward to making a wire transfer because I enjoy the interaction with the people I know there.<p>Corporations with local offices are still made out of people; like, while I prefer automated payments, if I end up in a situation where I need to write a check, somehow that&#x27;s on the other side of &quot;I may as well drive to your office and hand-deliver it&quot;; this meant for a long time I even knew the people who worked at my car insurer ;P.
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bluedinoover 11 years ago
Don&#x27;t forget that in poor areas, there aren&#x27;t many banks. When you&#x27;re in the suburbs there&#x27;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.<p>I&#x27;m not sure what the banks use to determine whether they open&#x2F;close a certain branch. Everyone jokes that &#x27;The First National on MLK Boulevard got robbed twice a month so they shut it down&#x27;, but I&#x27;m sure there&#x27;s some real process with population density and more importantly, income density.<p>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&#x27;t have anything for you to buy and they don&#x27;t take a cut.<p>This also means the poor can&#x27;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&#x27;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&#x27;re spending two hours in line during the day.
byuuover 11 years ago
When I was 19, I tried to open a checking account. Amazingly, I was declined. For a bank account. I didn&#x27;t ask for credit, in fact I had no credit history at all. I was apparently so unworthy that they didn&#x27;t trust me to give them my own money. I never understood that, as I figured they&#x27;d just bounce a check anyway if I lacked sufficient funds.<p>I&#x27;m much older now, and have a bank account, mortgage, credit cards, and all that jazz. Just a silly anecdote that it&#x27;s actually possible to be too poor to be allowed to have a bank account.
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apertureover 11 years ago
Currently, I&#x27;m interning at a well known banking wealth management company, and I find the rich like to have the same environment.<p>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).<p>I think a lot of banking should be like this. I doubt it ever could be, as most banks have very few people, but specialized areas, like this rite-aid, or some wealth banking, have the time to dedicate to these people.<p>Treating people like people, whether it is restaurants, or banking, or anything, makes a business less like a service and more like an experience. It should be something a lot of startup companies on hn should look into.
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blahedoover 11 years ago
When I read an article like this, I&#x27;m always amazed that more people haven&#x27;t discovered credit unions. Most of the objections that the article raises about &quot;banks&quot; are objections that I have too, except that they&#x27;re really about &quot;big (multi-)national banks&quot;. 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!
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a3nover 11 years ago
To all those who state that it&#x27;s irrational to be non-banked, remember two things:<p>1) Just as all the world is not a Vax, all the world is not you and your circumstances and acquaintances and anecdotes.<p>2) as the article briefly touches on, many people simply cannot get a traditional or even minimal&#x2F;basic bank account because of entries in ChexSystems. These entries may be correct and current, or they may be old, or inaccurate, or not reflective of current circumstances. And banks are only too happy to outsource the expensive process of judgment and &quot;knowing their customer.&quot; No banker ever got fired for following ChexSystems&#x27; recommendations (I assume).
thaumaturgyover 11 years ago
HN is so cute. So many people here talking about why poor people do things the way they do without having ever really experienced it.<p>Here&#x27;s why poor people don&#x27;t like banks: because banks don&#x27;t like them.<p>Let me paint you some pictures.<p>You&#x27;re not clean-shaven. You smell a little bit, whether because you just finished a smelly job or because you&#x27;re living on the streets or because you&#x27;re depressed and haven&#x27;t bothered to clean up in a day. You enter the bank, and no less than four pair of eyes look at you -- eyes that are surrounded by expensive haircuts, ties, and nice dresses or suits.<p>You&#x27;re exhausted and you can&#x27;t concentrate well. Maybe it&#x27;s the chronic lack of sleep, maybe it&#x27;s malnutrition, maybe it&#x27;s stress, or maybe it&#x27;s drugs or alcohol. You walk up to a counter with a check in hand. This paper is worthless to you, what you need is a different kind of paper that you can trade for things you need.<p>The teller asks you if you&#x27;re a customer. She&#x27;s polite, but polite in that barely perceptible condescending way that people are when they&#x27;re uncomfortable with the person they&#x27;re talking to.<p>You&#x27;re not a customer. She&#x27;ll have to charge you for cashing the check then (or maybe won&#x27;t do it at all -- depending on company policy).<p>Can you be a customer? She directs you over to a desk. The desk has a nice finish on it. It&#x27;s probably worth more than anything you own. It might even be worth more than everything you own.<p>You sit down at the desk and another person with a polite smile, perfect hair, and a nice tie or suit or dress asks you for some personal information and enters it into the computer.<p>You&#x27;re poor, so you <i>hate</i> computers. They keep track of you everywhere you go. You can&#x27;t seem to escape them. The police in different towns all somehow have access to the same information about you. Computers produce paperwork that occasionally makes it into your P.O. Box, or last address, or friend&#x27;s address, and usually it&#x27;s bad paperwork: more bad news, more stress, more trouble. Some faceless agency somewhere wants more of what you don&#x27;t have.<p>This computer is no different. A few keystrokes later, the representative apologizes in that polite-but-condescending way: &quot;I&#x27;m sorry, you&#x27;re here in Chex Systems for account abuse at BigCorp Bank three years ago, we can&#x27;t open an account for you.&quot;<p>This is the sixth bank you&#x27;ve been to.<p>Three years later, after a little bit of luck and a lot of hard work and a struggle that will forever leave a scar on your soul, you&#x27;ve finally reached the five-year expiration period for Chex Systems, you&#x27;ve finally got a regular job with a regular paycheck that is just barely enough to live on. You&#x27;re set up with free checking at some bank, but you&#x27;re very very careful not to overdraw your account, ever, because that one time you did it suddenly somehow turned into $250 of money that you owed the bank -- money that you didn&#x27;t have, because if you did, the bank wouldn&#x27;t be asking for it.<p>But this morning, your beater car finally crapped out for good and the low-rent apartment complex you live in forbids you from working on it in the parking lot. You can&#x27;t get to work without the car. You have a little bit of savings, about $100, and you just need to borrow a little bit of money so that you can get another beater and get back to work as soon as possible. Your job doesn&#x27;t offer paid sick days, so every day you&#x27;re out of work, you get a little bit poorer.<p>You walk or get a ride down to your bank and you sit down behind that desk, and that computer that you still hate, and you ask the polite-but-still-a-little-condescending nicely-dressed person if you can get a car loan. You quickly add, &quot;I don&#x27;t need much, only a few hundred dollars, and I&#x27;ll be able to get this car I saw down the street from my apartment.&quot; You make promises and tell the representative how important this is to you, because you&#x27;re under the mistaken impression that the representative has the ability to make a decision. But it&#x27;s not up to them, it&#x27;s up to the computer.<p>The representative politely tells you that they don&#x27;t do car loans for a few hundred dollars, they only do loans for a couple thousand. You don&#x27;t need a couple thousand -- in fact, the very idea of borrowing that much is really scary to you, because you&#x27;re pretty sure that if somebody gave you that much money you&#x27;d mess up with it, just like you always do, and then you&#x27;d owe <i>a lot</i> of money that you&#x27;d have no way of paying back.<p>But the representative tries to get you a couple thousand dollars for a car anyway. The computer says no: you don&#x27;t have enough credit, your credit is too bad, you don&#x27;t make enough, you don&#x27;t have collateral. In short: you are too poor.<p>It doesn&#x27;t matter that you&#x27;re a customer. It doesn&#x27;t matter how hard you&#x27;re <i>trying</i>. It&#x27;s just like all your friends say, it&#x27;s what you hear all the time: banks only lend you money if you don&#x27;t need it.<p>--<p>That was me. For years. I&#x27;m reasonably intelligent, I&#x27;ve never had a drug or alcohol problem. Still, though, I made a relatively simple decision many years ago, to take a vacation from the computer industry for a while and be a climbing instructor. Unfortunately, while being a climbing instructor was amazing and I&#x27;m still glad I did it, it didn&#x27;t pay very much, and eventually I got into trouble with a bank.<p>The economy started to have trouble then (dot-com bust), my computer skills were more of a liability than an asset, and for the next several years I struggled desperately to keep my head just barely above water. I was homeless for a while.<p>I&#x27;ve got my own business now and my finances are better and I <i>still</i> hate banks. I love the people at my local bank, but I hate banks.
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rm445over 11 years ago
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).<p>The benefits of paying a percentage to get your money a couple of days earlier are clear enough. But the avoidance of overdraft fees may be the key. When paper cheques have had their day and every non-cash transaction is software talking to a bank server, there will be no need for unarranged overdrafts to exist for every bank account. Accounts that carry no risk of unplanned fees would be a disruptive innovation, given that retail banks seem very addicted to the profits from overdraft fees.
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wavesoundsover 11 years ago
TLDR: Check cashiers have better customer service and (anecdotally) less stupid fees.
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gueloover 11 years ago
Banks have been continually inventing and raising fees on unsuspecting middle-class customers for decades. I wouldn&#x27;t be surprised if banks made more fee revenue per customer than check cashers.
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EwanGover 11 years ago
So basically the check cashers have become more like banks, and folks who are short on human interaction value that more than the extra couple bucks a monolith that pushes you to an ATM (that may charge you extra for your withdrawal as well) costs.<p>Wonder if any banks will see this as a proper wake up call...
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mikeashover 11 years ago
I thought this article was fascinating and made me think about all of this stuff in a completely new way.<p>I&#x27;m much like the author. I bank electronically. I actually just visited a physical branch today for the first time in months because I had a big wad of cash to deposit, and mobile phone deposit technology hasn&#x27;t quite reached the level of sophistication needed to handle cash yet.<p>My relationship with my bank is generally simple. They store my money, and occasionally pay it out or receive more. This is almost all automatic. The one thing they do that might actually involve some effort is the bill pay service, where they will actually mail a physical check in some cases. But most of the payees I have set up in their system have electronic arrangements.<p>When I need further service, they&#x27;re good about it. They answer their phones quickly, they can overnight a cashier&#x27;s check for a reasonable fee on the rare occasions I need something like that, and they&#x27;ll call me if something looks like fraudulent activity. But this comes up once a year or less.<p>For the most part, they&#x27;re basically another appliance for me. We have defined roles and we stick to them. I keep a generous pad of extra cash in the account, never overdraw, never need anything weird, and in exchange, they charge me no fees, even pay me (extremely nominal) interest, and don&#x27;t hassle me.<p>This works great if you have the responsibility and cash to do it, but it would fall apart if I didn&#x27;t. If I started cashing bad checks and overdrafting, I&#x27;d get hit with fees up the wazoo and I&#x27;d pretty much have to leave. Features that are an extreme convenience to me now, like totally automatic bill pay, would become a huge liability.<p>I looked at these places and thought that they offered less service. They don&#x27;t even keep your money for you, after all! And they charge you for the privilege! But, to their customers, they offer <i>more</i> service. They offer more control over their customers&#x27; money. They offer more flexibility and less punishment when bending or breaking the rules.<p>It&#x27;s a good lesson in not just assuming people are dumb or ignorant. Sure, a lot of people are, but when behavior is this common, there&#x27;s usually a good, rational reason behind it.<p>I always thought that if I was poor, I&#x27;d still be &quot;smart enough&quot; to bank properly with whatever money I had. Now, I wonder if that really would be &quot;smart&quot;.<p>I also wonder about financial regulation. I generally favor a &quot;better safe than sorry&quot; approach there, but this might illustrate a downside of that. We&#x27;ve all heard about the trouble that non-traditional companies have had with such regulations, whether it&#x27;s companies like Paypal, or Simple, or Bitcoin-related businesses. They try to get around the regulations in various ways. Here, RiteCheck is getting around banking regulations by simply not being a bank. I have to wonder if they could offer better service <i>and</i> some of the sort of safety and savings ability we associate with normal banking if it were less difficult for RiteCheck to offer something like an actual bank account.
antoncohenover 11 years ago
For those in San Francisco the city&#x2F;county government has setup &quot;Bank on San Francisco&quot; to help people use regular banks instead of check cashing places. They have partnerships with banks that allow people to get bank accounts even if they have had trouble in the past. <a href="http://www.bankonsf.org/" rel="nofollow">http:&#x2F;&#x2F;www.bankonsf.org&#x2F;</a><p>Bank on SF also has a small dollar loan program called Payday Plus SF. Their partners offer payday loans at reasonable rates (max 18% APR). <a href="http://paydayplussf.org/" rel="nofollow">http:&#x2F;&#x2F;paydayplussf.org&#x2F;</a><p>I know they don&#x27;t address a lot of the issues the article brought up, but they could be useful for people in certain situations.
omnisciover 11 years ago
So this woman spends some time in a cash checking place and now knows why &quot;poor&quot; people don&#x27;t use banks?<p>Poor people don&#x27;t use banks because you don&#x27;t need a bank when you live check-to-check. One doesn&#x27;t need to make a deposit when the check they just got doesn&#x27;t cover their expenses from last month. So her concluding statement of &quot;the banking industry needs to develop different fee and service structures designed to accommodate lower income depositors &quot;makes no sense.<p>It&#x27;s not a choice, it&#x27;s not like people are like &quot;Hmm, well I could deposit my money and make 0.5% back next month&quot;, it&#x27;s more like &quot;shit, I&#x27;m behind on my gas bill and can&#x27;t have my family freezing again this winter.&quot;<p>The fact that the teller at the check cashing place is like &quot;family&quot; and they speak spanish isn&#x27;t really a reason why the poors go there, it&#x27;s because they don&#x27;t have a choice.<p>As an former academic who made it out of the poverty system with some serious work and lots of scars to prove it, this article really pisses me off. Not only due to it&#x27;s lack of perspective, but due to it&#x27;s lack of due diligence to actually answer the question they claim to answer in the title.
qwertaover 11 years ago
Maybe it is because the services sucks as well. American banks are decades behind Eastern Europe, Russia or even Africa.<p>Just basics: account where &#x27;overdraft&#x27; is not possible (account can not go into minus). Debit with low (5%) interest can be arranged separately .<p>My bank had mobile banking in 1999 (simtoolkit &amp; SMS). In 2002 mobile banking become free!<p>Credit card fraud? How about white-listing expected transactions over the internet? How about setting up your own filters?
inninoover 11 years ago
Shit articles like this make me feel lucky. I don&#x27;t come an extremely wealthy background or anything but reading this sort of stuff makes me feel like a life-assets superstar. I have to say it makes me appreciate my bank&#x2F;national banking culture:<p>1) I can ask for an overdraft limit of up to $2000, which if I draw into I pay a $3 monthly fee for. 2) I have a credit card which I can easily ask for a limit up to $5000 if I ever need that sort of temporary cash (I don&#x27;t.) 3) Everything is done with banking cards here - balances update automatically, only credit cards have weird lags with responding to transactions.<p>Recently I dropped my OD limit to $200 to try and improve my financial hygiene. I didn&#x27;t watch my transactions and a small weekly automatic payment pushed me past my arranged limit. Talked to the bank and they explained in that case I would pay one $15 fee per month for any number of unarranged ODs. Seems pretty lenient compared to the American situation... but they never charged me the fee anyway!
pekruover 11 years ago
Being a citizen of a third world country (India), this sounds all too surprising to me. Looks like banking in the US is pretty shitty for the poor.<p>Out here, banking works like a charm. At least, most of the nationalized banks. Nobody pays the banks anything, and they get a little interest on savings&#x2F;deposits accounts. OD is not outrageously charged. Internet banking and ATMs are very friendly and totally inexpensive. Almost everyone has easy access to banks; with co-op banks and urban banks offering accounts with minimum limits of 500 INR (~9 USD), everyone can make use of banking institutions. Only those people with lots of black money would want to keep much of their stash away from banks to avoid tax authorities.<p>I am happy that at least our folks got basic stuff like banking right.
elnateover 11 years ago
Reading this it sounds like there is a non zero minimum amount you&#x27;re allowed to have in your bank accout. Is this true? I&#x27;ve never heard of such a thing in my country.
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bgilroy26over 11 years ago
It&#x27;s a tough situation, it has a lot to do with momentum. If these check cashers had profitable local ventures to invest in, they could hold deposits and pay out interest.<p>Because there isn&#x27;t a lot going on in the area, a deposit&#x2F;commercial bank isn&#x27;t interested in the area and in turn, business people in the area do not have as many local sources of capital.<p>In place that need it, entrepreneurship would lead to a rise in saving.
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RougeFemmeover 11 years ago
I&#x27;ve never been with a traditional bank, even though I&#x27;ve always been able to afford it. I prefer credit unions. I can get all of the &quot;bank-like&quot; services that I need at a credit union and I have the satisfaction of knowing that I&#x27;m not further enriching a bank CEO.
nellover 11 years ago
This might be the right place to ask:<p>Can I simply lend money on my own? setup my own site. People request for loan and I choose whom to lend money to. Kinda micro financing. How easy it is to do that?<p>I want to do something like $1000 @ a flat 5-10% p.a<p>What are the risks? Is defaulting a big issue?
RexRollmanover 11 years ago
That&#x27;s why Walmart has jumped into this. There is a lot of money to be made.
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morganteover 11 years ago
The meat of this article, hidden underneath all the fluff, is simply that fees are higher and poor people end up paying more of them.<p>Honestly though, they probably deserve that. I&#x27;ve never in my life been charged an overdraft fee because it doesn&#x27;t take much to just track the payments you make and never go over.<p>Of course, an inability to plan is probably why they&#x27;re poor in the first place...
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