How In God's Name Can You NOT Have a Bank Account?

[Northern_Piper]

Is it possible that one of the reason that for this reluctance in the U.S. to open a bank account is that there has been a greater history of bank failures in the U.S., contributing to more distrust of banks, than has been the case in other countries?

For example, in Canada, the last bank failures were in 1985, and those were two small regional banks. Nonetheless, that was serious enough to trigger a federal inquiry, chaired by a Supreme Court judge. Prior to that, the last bank failure had been in 1923. In other words, no banks failed in Canada even during the Great Depression: Canada’s Banks

Safety and soundness

There have been very few bank failures in Canada, which is widely acknowledged as having one of the safest and soundest financial sectors in the world. Two small regional banks failed in the mid-1980s, the only such failures since 1923. The soundness of the Canadian banking industry was demonstrated when it absorbed the debt difficulties of the less developed countries in the early 1980s and the decline in real estate values a decade later without experiencing any systemic problems.

By contrast, in the U.S. you had the savings & loans debacle in the late 80s - early 90s, and I believe bank failures during the Depression.

That different experience may lead to different views of the safety of banks as places to keep your money.

[Ottoerotic]

I work for a major bank in Wisconsin and this thread is making me consider opening a “Ask the Bank guy” thread.

First off there are alot of people that don’t qualify for bank accounts, I’d say 75% of the people who don’t have bank accounts would be considered “unbankable”. This doesn’t nessesarily have anything to do with their credit, there are other reports that we use to see if you qualify. Actually even if you have bad credit we could probably still open and account for you, its the other reports that cause a major problem.

The people that don’t have accounts because they don’t want them are a different breed. These days most (and by most I mean 99%) banks will give you a checking account with no minimun as long as you get direct deposit. Times have changed in recent years. Most of these people are either intimidated by managing accounts or are afraid of getting screwed. These concerns are unfounded for the most part.

Then there are the people who don’t want direct deposit because then their spouse will know exactly what they are bringing home, and then they can’t stop off at the bars, or keep some for their other vices.

In some of the inner cities that I’ve worked in banks ranked right up there with police as far as popularity goes. You would be surprised (or maybe you wouldn’t) at the number of poor people who just don’t trust the government. They see us as an extension of the government and deal with us only as much as they need to to survive.

If ya’ll are interested maybe I will open that “ask the banker” thread, I just didn’t think there would be much interest in it.

[JohnM]

There’s another class of people, of which one of my coworkers is a member, who have bank accounts but are resistant to direct deposit. His fear is that if our employer has the ability to put money into his account, they also have the ability to take it out (say, in the event of an inadvertent overpayment.) Given that in a previous incarnation our company’s top officers all went away for a little federal vacation sponsored by the SEC, he refused to use direct deposit until it became too painful to do otherwise. He still doesn’t trust it, though.

[Tenar]

@Lissa

s I understand, what will be set up for non-conpliant employees is not a “bank account” per se-- the money will be electronically transfered to the bank and they will be able to draw their pay from it via a debit card, but the fees are outrageous. IIRC, it woun’t work like a normal debit card which you can use in some stores. The employee will only be able to use it at the bank to draw funds.

Many thanks

[Othersider]

@even sven

Many people don’t trust banks. Banks do fail- maybe not in the US in our lifetime, but certainly in plenty of other places.

Did anyone else read this and think of “It’s a Wonderful Life”?

[Equipoise]

We haven’t had a bank account for 16 years. This attitude that people who don’t have bank accounts are freaks is a bit disconcerting.

@kittenblue

You don’t have to have a bank account for direct deposit. I got an offer for a self-funded Mastercard that you can either fund by bank transfer or direct deposit. All the money goes into the Mastercard account, and you use it as you would a check card from your checking account.

This is what I do, except mine’s a Visa. I Direct Deposit right into the account, it loads up my card and then I can use the card anywhere that takes Visa. I can get cash out of any ATM, and the company (Wired Plastic) will write and send checks for people and companies that absolutely have to have checks. The fee is something like $3.95 a month for the card, $0.95 for each check I write (and there are 3-4 bills I pay a month where I use their check service) and that’s it. I pay the rest of my bills online using the card directly, and I can use PayPal to pay for things that take PayPal. People can even PayPal me and I can turn around and put the money on the card.

We don’t have to mess with banking bullshit. We CAN’T run up a credit card bill, and are debt-free (except for regular monthly bills). We can’t spend more than what’s on the card, so it makes us think about what we buy. If we do have to add more money to the card, we do it via Western Union Swift Pay, which costs $3.95 (I think). We’ve had this card for several years and I don’t know what I’d do without it.

It’s perfect. We love it. We’re not “real people” I suppose, but we’re not freaks either.

[mks57]

Some banks don’t want low or middle-income customers. They won’t open branches in “unattractive” areas, and their retail banking products are saddled with excessive fees and restrictions. If you have any sort of credit problems, forget about it.

[Martini_Enfield]

Isn’t a Credit Card a form of bank account in and of itself?

[Ottoerotic]

@mks57

Some banks don’t want low or middle-income customers. They won’t open branches in “unattractive” areas, and their retail banking products are saddled with excessive fees and restrictions. If you have any sort of credit problems, forget about it.

Well there are safegaurds in place to try and keep banks from pulling this kind of crap. Our bank has special products for less than ideal customers. Funny thing is the only pamphlets that we have printed in both english and spanish are the accounts for the “non-ideal” customers. Now while I hate people that play the race card, I gotta wonder how the hell we got away with this without somebody screaming.

[xbuckeye]

@Equipoise

…The fee is something like $3.95 a month for the card, $0.95 for each check I write (and there are 3-4 bills I pay a month where I use their check service) and that’s it…
…If we do have to add more money to the card, we do it via Western Union Swift Pay, which costs $3.95 (I think)…

You know, my credit union lets me do all these things for free (well, I have to keep $5 there, and checks cost like $0.095 each for the duplicate ones), pays me interest on my money that they are holding for me if I maintain $500 average daily ledger balance, and gives me a free debit card with a VISA logo I can use anywhere that takes VISA. I don’t understand why you think that this is a better solution.

[FatBaldGuy]

@Equipoise

We haven’t had a bank account for 16 years.

Don’t look now, but you have a bank account. Just because your “bank” doesn’t have a local branch office where you can walk in and talk to a teller, you still have an account with a financial institution (the card company) where you make deposits and withdrawals.

The OP is talking about people who cash their paycheck and pay for everything with cash. That doesn’t fit your case.

[Lissa]

@Ottoerotic

Well there are safegaurds in place to try and keep banks from pulling this kind of crap. Our bank has special products for less than ideal customers. Funny thing is the only pamphlets that we have printed in both english and spanish are the accounts for the “non-ideal” customers. Now while I hate people that play the race card, I gotta wonder how the hell we got away with this without somebody screaming.

At my bank, I see all sorts of customers, from the obviously-wealthy business owners making large deposits, to customers who drive up in cars that seem unlikely to make it up the slight hump in the parking lot. I do a lot of my business in the lobby, so I get to see a lot of people in there. I’ve seen them give the same courtesy to someone who only has a balance of a few dollars as they do to the business owners.

[Lissa]

@Equipoise

This is what I do, except mine’s a Visa. I Direct Deposit right into the account, it loads up my card and then I can use the card anywhere that takes Visa.

Just as a warning to those who may want to do this themselves. If you make any large deposits to your credit card accounts (or large payments, for that matter) which are substantially more than you usually do, make sure you give at least a week or so to let the money clear before you try to use them.

Sudden large deposits to credit cards or much-larger-than-usual payments (there’s a certain percentage they use) set of a Homeland Security Warning, and they won’t allow you access to the funds until they’ve checked it out. Hubby and I learned this the hard way. We came into a large sum of cash and decided to use it to pay off all of our outstanding balances. To our surprise, all of the cards to which we’d made these large payments didn’t work. (Well, I can’t say all because we only tried to use a couple of them.) It was a bit embarassing to have our cards declined until someone explained it to us.

[UncleRojelio]

@Equipoise

This is what I do, except mine’s a Visa. I Direct Deposit right into the account, it loads up my card and then I can use the card anywhere that takes Visa. I can get cash out of any ATM, and the company (Wired Plastic) will write and send checks for people and companies that absolutely have to have checks. The fee is something like $3.95 a month for the card, $0.95 for each check I write (and there are 3-4 bills I pay a month where I use their check service) and that’s it. I pay the rest of my bills online using the card directly, and I can use PayPal to pay for things that take PayPal. People can even PayPal me and I can turn around and put the money on the card.

This sounds amazingly similar to a bank only a great deal more expensive. Can you expound on what you think the benefits of this scheme are compared to a bank, or better yet, a credit union?

[control-z]

I know several working adults who don’t have bank accounts, and one who just recently got one. They pay everything with cash or money orders, often in person. For some reason you were able to pay your phone bill at the bank or grocery store (I forget which one.) Stuff like that, they just deal with local businesses and keep things simple. Except I don’t think it would be simple to wait in line for all those money orders.

I have bank accounts but I most pay cash for things. I like cash because it’s untracable (I just don’t like data about my purchases being collected, nothing to hide at all) and when you pay, it’s over with.

[Trunk]

Of all the things we do, I think that banking tend to be a little abstract.

In most of daily life, you leave money, you get a good (food, clothes, beer) or, a service (the guy fixes your plumbing, mows your lawn) in return. Banking is different, though. You’re just leaving your money with someone who is sitting on it for you and they’ll give it to you only when you ask for it. Why WOULDN’T you just say, “no thanks, I’ll hang onto it myself.” Especially if you’re coming from a background where money is scarce, and you have ZERO role models of people who saved and held onto a lot of money.

ANYONE who has the sense and the experience to actually ponder the question, “should I use a bank or not” will indubitably come to the conclusion that they should. . .a couple anecdotes and scare-stories don’t make the case against banks.

But, Lissa is not talking about people who are thinking, “oh, they require a $50 minimum and that I keep $50 in there at all times so I’m just gonna be out $50.” They just don’t understand banking on that level.

I don’t think we’re even talking about people who don’t want their wages garnished or are worried about paper trail.

They certainly haven’t weighed the pros and cons of paying fees to the check cashing place vs. paying fees to the bank.

I think we’re talking about people who don’t understand banking AT ALL. They don’t get the concept of storing your money somewhere else and drawing on it, or the concept of leaving money from your paycheck with someone else. Don’t even try to tell them the bank might lend their money out, but they’ll pay them some interest for the privilege. Their parents didn’t bank. They don’t have banks in their neighborhoods. They’re not marketed to by the banks.

You can’t just go up to some guy at check-cashing at go, “why don’t you bring that to the bank, and just draw on it when you need it.” You can’t tell a guy who has done it his way for 20 years to just start banking.

And, to expect these people to understand personal investing or retirement saving is ludicrous. A lot of well-educated people with good jobs don’t even get that far (don’t believe me? watch Frontline tonight.)