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.


chuck galle said...

It seems "them as has, gets" is still operant in this society. The rich still squeeze their wealth from those who least understand the economy, usually because they have other aspects of their lives they feel are important. Family, friends, the various natural interests that attract people who aren't driven to accumulate. I have no idea what the solution is; it seems like it just ain't fair and we can't make it fair either. Many of us find profound happiness without gouging other people or playing sharp because there are so many wonderful, satisfying things to do with our lives we don't have time to think about how to rip off a pile of dough. The system isn't broke, it's just not a good system, and we don't know how to devise a better one.

Star Lawrence said...

I also think people will figure out a way to survive--and already some are thinking, "Hey, I don't need to be on the grid to scratch by." At the same time, these corporate citizens such as banks are doing the same--get some small regulations, people don't want to borrow your money, OK, we'll make money on excessive fees."