Thursday, August 19, 2010
The "unbanked" walk among us
Now meet the “unbanked.” At least, the Wall Street Journal is just meeting them.
Out here in Arizona, many people are in the cash or shadow economy. They don't have their own bank accounts. They use check cashing services, money orders for bills, that sort of thing. If they get a check, they also can take it to the issuing bank and cash it.
Nationwide, this is 17 million people, hardly a handful.
States are now trying to persuade people to come to banking, according to Sudeep Reddy, writing in the WSJ, Aug 18, 2010.
Problem is, people have been burned—their tax refunds go in their accounts and are sucked out by overdraft fees and other costs lying in wait.
Why the heck does a bank incur a $35 cost when you overdraw? Is it paperwork? What? Just because they can? $35 is a lot of money these days.
With bank savings account paying 1%, what is the incentive to use a bank to save? (Internet banks like ING pay slightly more.)
The FDIC is starting a pilot program to encourage $1 minimum balance accounts and rein in fees. Pilot only. The banks freak out if someone says this could go nationwide.
Let’s see if this works. But what do I mean by, “works”? More customers for banks-like they have been so great to all of us.