Millions of Americans Who Avoid Banks Offer a Peek at the Underground Economy | WHAT REALLY HAPPENED

Millions of Americans Who Avoid Banks Offer a Peek at the Underground Economy

snip: Last week, the Albuquerque Journal pointed out that over a third of households in the city either avoid banks entirely (the “unbanked”) or else keep a checking account but do much of their business through cash, check-cashing shops, pawn shops, money orders, and other “alternative financial products” (the “underbanked”).

A few weeks earlier, the Kansas City Star reported a similar local situation, with 12 percent of households and 45 percent of African-American families completely avoiding banks.

In both cities, the phenomenon is growing.

Nationally, according to the Federal Deposit Insurance Corporation (FDIC), 7.7 percent of U.S. households are unbanked and 20 percent are underbanked. Another 5.3 percent are unknown. Not having enough money to open an account is an understandable and widely cited reason to not do business with banks. Use of banks rises along with income—though 5 percent of households making $30,000-$50,000 are still unbanked and 13 percent of those making over $75,000 remain underbanked. Maybe that’s because 34.2 of respondents to an FDIC survey say they don’t like or trust banks, and another 30.8 percent find bank fees too hefty or unpredictable to tolerate. Twenty-six percent cite privacy as a reason for keeping clear of banks – bankers say that increased federal reporting and documentation requirements drive many customers away.

Comments

SHARE THIS ARTICLE WITH YOUR SOCIAL MEDIA