Bank accounts can be hard to get for low-income Americans and minorities, and that ends up being costly, as MarketWatch’s personal finance reporter Maria LaMagna explains in a recent story.
Those most likely to be “unbanked” (the term for those who don’t use these accounts) were non-Asian minority families, lower-income households, younger households and unemployed households, according to the FDIC. About 58% of those who are unbanked said a reason was they didn’t have enough money to keep in an account, or meet a minimum balance; 34% said they dislike or distrust banks and about 31% said one reason was their concerns about high or unpredictable account fees.
It is interesting to note that the number one reason that people say they are unbanked is that they don’t have enough money. In the rest of the article, LaMagna talks with experts about the options available to unbanked people, including prepaid cards. Despite the fact that many people say they don’t have enough money for a bank account, many of the experts in the article were still pushing checking accounts as the only option for these customers. Yet prepaid cards can be a way to build up financial assets, and many offer the same features as banks including savings accounts that pay better than average interest, bill payments, and money transfers.
The article hints at bigger issues facing some communities, which cannot be solved simply by transaction accounts. Financial services companies need to find ways to help customers build wealth in order to have profitable account bases.
Overview by Ben Jackson, Director, Prepaid Advisory Group
Read the full story here