Savings accounts can be overdrawn in quite a few ways: service charges and fees can exceed the amount available in the account, or the bank automatically approves a withdrawal, wire transfer, or debit despite the account having insufficient funds, or the bank may allow access to a deposit which turns out to bounce after the funds are spent. And these can be just as expensive as an overdrawn checking account. I’d bet that banks do these “favors” like automatic debit card approvals or instant access to deposits in order to increase the likelihood of getting to charge overdraft fees.
If you do some reading, while Wal-Mart’s new check-cashing service etc. sounds awful… they’re actually an improvement, fee-wise, on the independent check-cashing services. They fill a need for the un-banked.
Ugh. Now you’ve made me defend Wal-mart. I feel dirty.
For a while, we had a nanny who did not have a bank account. Nor did she have easy access to the bank where our checks were drawn (a credit union; nearest location was 10+ miles away). We had to set up a checking account at a nearby bank; every week we’d give her a check drawn on that account. plus a check from our regular account, to deposit at the same time to cover her next week’s payroll (saving us a separate trip to make that deposit).
It sure would have been easier if we’d been able to do a direct-deposit thing but here in the US, DD is harder to arrange from individual-to-individual even if she had had a bank account.
I grudgingly agree with you. There’s a lot of Wal-Mart hatred out there among social liberals, but they fill a need. They’re certainly more reputable than most check-cashing services.
One reason, that has absolutely nothing to do with either income or race to avoid DD is simply to hide one’s income from one’s spouse/partner/parent/child and such.
I’ve known people for years who always take their pay in the form of a check, and run right off to the bank to deposit some, and keep some aside.
That works on both sides of a marriage as well. One couple, both with jobs, would each take a hard check, deposit some joint, deposit some solo, and keep some out as cash. It worked for them.
Civil judgments are also an issue. People with non paid credit cards bills have a judgment entered against them and their creditors are always scouring their bank accounts for cash to take.
I know several people who don’t use banks for this reason.
There’s another working-class-to-lower-middle-class reason for wanting paper checks. In some industries (construction for sure, probably restaurants and others too), companies can often have problems with their cash flow. Employees (at least below management level) in these industries almost universally get their paychecks, immediately (do not pass GO) go to the bank the checks were issued from, and cash them while there’s still money in that account. Most of them will tell you of the one time they couldn’t get to the bank on Friday lunchbreak, and by Monday the paychecks were bouncing. (Sure, they’ll probably eventually get a new paycheck, but how do they pay rent in the meantime?)
It’s not that they’re operating on cash only: many will immediately take the cash to their own bank and deposit it into their checking account. But they won’t deposit the check into their account because it won’t be presented for clearing to the issuing bank until Tuesday at least.
I’m not saying this is a persuasive argument for refusing direct deposit from an established and reputable health care company, but for people who’s family has mostly worked construction or similar jobs, paychecks they can cash immediately do have an attraction.
I think it’s mostly an economic issue, and I can’t quite describe it, but … when I was young and we were poor, life was chaotic. Being poor and on the edge, any unexpected expense would mess everything up, and it would feel like “the system” was fucking with us, even if the answer for many problems boiled down to just the fact that we were poor.
I believe my mother’s aversion to banks went along the lines of: If the universe seems to be filled with people and companies that seem to be anxious to take advantage of you, you really can’t trust anything, and many new ideas are probably just more ways they can make you vulnerable to some other mistake or malfeasance.
My husband and I maintain separate accounts. His paychecks go into our joint account, and my paychecks go into mine. (I pay some bills out of mine, so it’s not like I’m holding out.) The reason for this is because his employer has royally screwed up his pay account in the past, and I didn’t want to risk having no money at all while his employer sorted things out. And since he’s occasionally out of the country, having separate accounts means there’s no risk of things bouncing because of an inability to communicate.
When I worked for the bank, I saw a lot of this with the Latin community. They’re probably the highest minority in this area and a lot of them refused direct deposit, or even depositing much in their accounts. They would usually keep just enough in their accounts to cash their checks each week and that was it.
The (few) people at my company who opted out of direct deposit did so because they did not want their spouse/ex-spouse to be able to find out how much they earned. Our controller told me it was the same at previous companies he had worked at. I didn’t notice any racial correlation.
I’ve always used direct deposit in the past, and I’ve never had any problems. However, I’ve just started a new job a few weeks ago, and the fineprints of their direct deposit agreement made me a bit uncomfortable, and I decided to opt out of it. (I’m not black, FWIW) The objectionable part is that it says if the company has determined that I owe them money for whatever reason, the DD agreement gives them the authority to recover that amount directly from my account, subject to any applicable state law. Note that this is not just the usual clause about withdrawing money that was deposited in error (they have a separate clause that covers that, and I don’t have any problem with that). I don’t feel like researching what kind of limitation does state law put on that kind of thing, but let’s just say that I’ve been extremely unimpressed by the HR department of the company throughout the recruitment and job application process, and I don’t trust them enough to not to fuck something up. I’ll just take the check and deposit it into my account myself.
That is not true with all banks. The bank our employer uses will charge a fee to cash your check if you do not have an account with them. (Wachovia) That didn’t occur to me before I asked this question but now I am wondering if these people are paying that fee or actually have their own account that they deposit the hard check into. Hmmmm.