Readers Not Among The Unbanked

The number of unbanked citizens in St. Louis is high, but according to the unscientific poll last week readers of this blog aren’t among them:

Q: Not everyone uses all available financial tools, which of the following do you use? (check all that apply)

1. Debit card(s) 56 [14.58%]
2. Retirement account through employer 43 [11.2%]
3. Credit card(s) paid each month 43 [11.2%]
4. Checking account at brick & mortar bank 42 [10.94%]
5. Investment portfolio 39 [10.16%]
6. Checking account online 38 [9.9%]
7. Savings account online 35 [9.11%]
8. Savings account at brick & mortar bank 28 [7.29%]
9. Savings account at brick & mortar credit union 20 [5.21%]
10. Credit card(s) with a balance each month 20 [5.21%]
11. Checking account at brick & mortar credit union 18 [4.69%]
12. Other: 2 [0.52%]
    • dwolla (for online payments)
    • checking with interest at credit union
13. None: no checking, savings, debit, credit, portfolio 0 [0%]

I was a little surprised to see online checking/saving ranked higher than credit unions. However, we just recently opened an online savings account separate from our credit union checking & savings accounts, it’s very user friendly. We both had bank accounts for years but a few years ago I switched to a credit union. I never ordered physical checks since bills can be paid online, with debit card, or via bill pay online. I never liked paper checks — all that processing:

On a normal day, about $6 billion was literally up in the air as checks flew to their destination. That amount grew to $47 billion after the FAA grounded planes in the wake of the 9/11 terrorist attacks.

That spurred passage of the Check 21 Act, which allowed banks to use electronic images of checks instead of paper. (Business Insider)

But to the unbanked out there financial life isn’t as easy.  Apparently many have their income, often social security, sent to check cashing places. They go in monthly to get their money in cash, less enormous fees. Then they end up buying money orders to pay bills. Meager incomes made even worse by the costs of being unbanked.  Prior experience with bank overdraft fees and closed bank accounts have left many thinking cash is their only option. Businesses like check cashing places, tax refund lenders, title lenders, etc prey on the less financially literate in our community.

Here’s more on who is unbanked:

Among common demographics (income, education, age, race and family structure), several vulnerable groups emerged:

• Households with incomes less than $15,000 were unbanked at a rate of 31.4 percent.
• African-Americans were unbanked at a rate of 26.5 percent.
• Households headed by single mothers had unbanked rates of approximately 23.5 percent.
• Individuals with no high school degree lacked transactions accounts at a rate of 24.5 percent.

A comparison of the at-risk groups with the District average (9.5 percent) is stark: They were two to three times more likely to be unbanked. (Federal Reserve of St. Louis) 

This problem is a community problem. I don’t know the solution for reducing the number of unbanked in St. Louis, but organizations like Justin PETERSEN are working on the problem.

— Steve Patterson