I was on the bus the other day when I overheard the two people, a young man and woman, in front of me talking about a paycheck.
“Yeah, I just got paid, but now I have to see if some place will catch it.”
The man got on the phone and called a Fred Meyer. “Hey, do you cash work checks?” [Pause] “Okay, as long as the information matches my ID. And how much do you charge?”
I didn’t hear the answer, though I later learned that it’s $3.50 per check.
I instinctively wondered why this person wasn’t just depositing it in their checking account.
Unless, of course, they didn’t have one.
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In the U.S. 7% of the population is considered “unbanked”, meaning that they don’t have access to a checking or savings account.
There are reasons why people may not have an account, among them:
- Fear/mistrust of banks
- Difficulty in accessing a bank
- Lack of financial literacy
- Don’t believe that they qualify
- Past financial problems
- Lack of identification
For many of these people, a prepaid debit card, one that doesn’t require an account to open, or in some cases, even an ID, can be a lifeline. I used a prepaid debit card recently when trying to make an anonymous purchase, and while for my purposes I found it challenging, it does work for many people.
It wasn’t free though, and therein lies some of the problem.
Reasons to be banked
There are those who cannot get a checking or savings account. Bank sometime use past mistakes against people.
But for everyone else, a checking account is such an unbelievably good idea that I can’t stress it enough.
In the U.S. we have a curious malevolent streak toward our nation’s poor and struggling. While our Statue of Liberty has something to say about poor huddled masses yearning to breathe free, our rhetoric today says, “anyone can be successful, so if you’re poor, there’s something wrong with you, so it’s your fault and I won’t help you.”
And we see this in what feels like the actual criminalization of poverty. One reporter for the L.A. Times tried living unbanked for a day and found it nearly impossible. And he got off easy.
What is certain is that being unbanked is almost always more expensive than being banked. Imagine having to pay $3.50 every time you wanted to cash a check. Imagine having to pay a fee to pay bills. Imagine how much time it takes to stand in line to do all those things.
“Life is more expensive for people who have less,” is a quote from an actual VP of a bank. To me, that’s just wrong.
With a checking account, you can be insulated from some of the difficulties that come along with being unbanked.
Having a checking account saves you countless amounts of time and money, and builds a financial legitimacy that can benefit you in other areas, such as getting a job or a place to live.
Forget about the big banks though, if you can. Their fees are often onerous, and they have no incentive to offer any service to you. And frankly, given how they’ve handled things, you don’t really have an incentive to work with them either.
Go with a credit union if you have one in your area. They are often easier to join (mine just has a residency requirement) and, structurally, have less reason to screw you over.
(Don’t know if you have a credit union near you? Search for one here.)
Contrary to popular belief, you don’t need a Social Security number to get a bank account. If a bank has a policy like this, go to one that doesn’t.
Also, even if you’ve had financial issues in the past, many banks are offering “second chance” accounts. You are not automatically disqualified.
If you need a step-by-step guide, here’s one for opening your first checking account.
Some things are not worth opting out
[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]Being unbanked makes life harder and more expensive. You need to have a certain amount of privilege to be able get away with that.[/perfectpullquote]
I do respect those who wish to opt out. I’ve never owned a smartphone, I’ve never had a Facebook account, and don’t use Amazon Prime. Hell, I’ve never even seen or read Harry Potter or Game of Thrones. I’m effectively a cave-dweller.
But being unbanked makes life harder and more expensive. You need to have a certain amount of privilege to be able get away with that.
As much as I wish it were otherwise, our country does not take care of its most vulnerable. In fact, they are often the most preyed upon. (Look at payday lenders. Or rather, don’t.) It would be nice to not play the game, but the only person hurt by standing on principle here will be yourself.