Why Many People Go Without a Bank Account
'Time' lists four reasons why people use outside services
By Neal Colgrass, Newser Staff
Posted Nov 24, 2012 4:48 PM CST
In this Aug. 10 2010, a man looks into the UBNY check cashing store as another walks past, in the Hell's Kitchen neighborhood of Manhattan in New York.    (AP Photo/Mary Altaffer)

(Newser) – Nearly a third of Americans are "underbanked," meaning they lack access to a full array banking services—but why? The question is particularly pressing when you consider that cashing checks and paying bills without a bank account can cost an extra $380 a year. What's more, low-income, unemployed, and minority Americans are more likely than other groups to have no bank account. So why pay more for financial services when a $10-a-month account would do the trick?

For four reasons, according to Time:
Unavailable services: Banks prefer moneyed customers, so they don't always offer services to low-income people. When forced to by state law, banks may have the services but won't promote them.
Time and money: Workers burdened by a long commute or long hours may not be able to reach a bank during business hours. And people low on money may need to cash their checks right away.
Lack of trust: Newly arrived immigrants may not trust banks, and low-income people may avoid direct deposit because they distrust electronic banking. The fear of $25 charges for bounced checks and other errors also keep low-income people away from banks.
Financial literacy: Potential bank customers may not understand what it costs them to pay bills and cash checks with outside financial services.

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Nov 25, 2012 9:11 PM CST
After belonging to a C.U. for 35 years I relocated to another state and had to open an account with a bank to cash my paycheck. I suddenly began bouncing checks and absorbed all those fees. I finally figured out how they were manipulating my activity with out-of-sequence checks and demanded an audit. For two years this went on with BB&T refunding paltry amounts 3 times and NEVER being able to reconcile my records and theirs.After 35 yrs. of NEVER bouncing a check I suddenly forgot basic math? Happened with Wachovia and then Sun Trust.We're talking THOUSANDS over a 4 yr. period. Never mind the $12 mo. "maintenance" fees, $7.00 a month fee for going under a $500.00 balance yada yada yada. FUCK ALL BANKS AND BANKERS. I now belong to a C.U. again and have never been happier since the original switch.Member owned and service oriented. Wise move for everybody. Why would those99% crowd EVER consider doing business w/ a bank. Kinda contradictory isn't it? Hypocritical, umhmmm. BANKS Suck. Legal robbers at the stroke of a keyboard and condoned by fat cat politicians that strike deals with them. Why do you think that for years C.U.'s COULD NOT be FDIC insured?
Nov 25, 2012 1:11 PM CST
For the past 20 yrs, I have used a credit union, I wouldn't do it any other way
Nov 25, 2012 11:38 AM CST
My bank, a small local one, just merged with it's larger partner.Now there's a whole raft of new fees, reduced services and problems (especially with the 'on-line' banking so I'm told.). I went to get a money order for the electric bill and was told I'd be charged $5.00 for it. I was floored. Previously they'd been free (one per day). I told them I hadn't seen THAT in the 'information packet' they sent me. What I read was that the policy wasn't changing. They said I was wrong. I still got my free money order but I won't be getting them there any more. Credit unions are great but the only one around here requires a $250.00 minimum daily balance to avoid fees. Which I can't do. A lot of the big mega banks only want well-off customers and actively discourage low-income people from banking with them.Ran into that as a teenager. Had an account with a big local bank (which my family had been banking with for years). Went to make a deposit and found they'd closed my account for 'lack of activity'. I only had about a hundred dollars in the account which somehow disappeared when they closed it. I never got it back and the only explanation I got was that ,my account was 'too small' for them to maintain (Geez I was 16! How much money does a 16 year old have to begin with???). Took my money to another bank opened an account, no problem. And that worked out great until they got bought out by an out of state mega bank. Which is probably exactly what's going to happen to my current bank once the 2 year waiting period is over. Even the folks at the bank are predicting it. Oh and as for the big bank that screwed me over at 16? Well the local economy tanked asfter the states biggest real estate company was proven to be a ponzi scheme, and the bank (which had loaned them multi millions of dollars) went belly up. One of the reasons experts gave for that was that they focused too heavily on catering to the wealthy and not enough on average consumers. Duh!