Tags: bank | account | costs | customers

Millions Are Without Bank Accounts Due to Costs

Monday, 22 Apr 2013 12:30 PM

By Melanie Batley

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
About 8 percent of America’s 115 million households are carrying on their lives without a checking or savings account because of the high costs and fees charged by banks or because they simply don't trust the nation's financial system.

The figures are even higher for minorities, with roughly 20 percent of African-Americans and Hispanics living outside the banking system, according to census data compiled by the FDIC and reported by NBC News Monday.

The biggest problem is that many U.S. households are just too broke to utilize the services banks offer. Overdraft or bounced check fees can add up for people who have difficulty maintaining minimum balances or whose incomes vary from paycheck to paycheck. And interest rates on savings accounts hover around zero percent, so many don't see the value to begin with of putting their money in banks.

“Instead of making money, I would have to pay fees,” said Sabino Fuentes-Sanchez, who didn’t have a bank account for years. “[So] we used to keep money in the house. We were always trying to look for ways to hide the money in the house to keep it safe.” At one time he had $25,000 hidden in different places.

According to an NBC News report, 56 percent of people who live outside the banking system earn less than $15,000 a year. And because they live what amounts to cash-only lives, they end up being penalized even more because they have little money.

Banks typically charge them $6 to cash a check, for example, and if they need extra money for emergencies they usually get it in the form of payday loans, which can come with triple-digit interest rates attached. And for many, it's also nearly impossible to save when living a cash-only life.

“Cash in hand is cash spent, my mother always said,” said Kim James, who was homeless for most of the last 10 years because, in part, she had no place to save money.

In response to the problem, a number of financial companies called Community Development Financial Institutions (CDFIs) are now springing up to help persuade those without bank accounts to open them.

“You make sure people are getting products and services they need,” said Mark Pinsky, CEO of the Opportunity Finance Network, which helps fund CDFIs. “Banks may be the best place, they may not, but we don’t want to just leave them vulnerable to the predators out there.”

© 2014 Newsmax. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Retype Email:
Country
Zip Code:
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
You May Also Like

Report: California Teachers Among Highest Paid

Friday, 01 Aug 2014 21:00 PM

Teachers in over half of California's schools are paid an average $84,489 a year, a new think tank survey shows.
 . . .

Twelve States Challenge EPA Coal Plant Emissions Limits

Friday, 01 Aug 2014 19:48 PM

A dozen states led by West Virginia sued the U.S. Environmental Protection Agency to block a proposed rule that would li . . .

New York Police Chokehold Death Ruled a Homicide

Friday, 01 Aug 2014 17:22 PM

A chokehold used by a police officer on a New York City man during his arrest for selling untaxed, loose cigarettes last . . .

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved