Overheard In 10 Million American Households: Bank Account? What Bank Account?

I used to know a guy who kept his money hidden in his home because he didn’t trust banks. Like, all of it. He would never tell me where, obviously, guess though I may (Freezer? Under the mattress? Behind the “secret” DVD collection?). He isn’t alone — there are 10 million American households that don’t have bank accounts, a number that is increasing every day.

The most common reason households said they didn’t have any kind of bank account is because they don’t have enough money to open one and keep it funded, according to 33% of  respondents the Federal Deposit Insurance Corporation surveyed. In 2009, 7.7%, or 9 million households, didn’t have accounts and instead rely on prepaid cards, payday loans or other services to get cash.

A checking account is not an easy thing for many people, especially when banks aren’t too keen on working with consumers who aren’t seen as desirable, reports CNN.

“[There’s a] declining availability of free checking — and a lot of that is banks pushing out unprofitable customers,” said a senior financial analyst at Bankrate.com.  “And if you have a tendency to overdraft accounts and fees are $35 a pop, that’s really going to prompt you to not open an account.”

While some can’t face the financial challenges, there are 21% of households who just don’t want or need an account; 7.5% that don’t trust banks; 5.4% that can’t open accounts due to lack of required ID or bad credit and another 6.4% that used to have an account but the bank closed it.

Many of these households use alternative financial services to get their hands on the cash they need to use in daily life, and 12% of households have used one of those means in the last 30 days. And if households aren’t using only cash, many get prepaid cards, at 18% of non-bank households.

10 million U.S. households don’t have bank accounts [CNNMoney]


Edit Your Comment

  1. Allwayswright says:

    “And if you have a tendency to overdraft accounts…”

    Maybe I’m just heartless, but to me, if you overdraft your account once then it is an accident… if you find your self in a pattern of over drafting then you are just irresponsible. Under what logic is a pay day loan or debit card better than a bank account? I suppose if you have less than $1,000 on hand, you might not see a need for a bank, but if you have more than that, I’m sure you could get an account.

    • humperdinck says:

      Yes, all people who live paycheck to paycheck and find themselves frequently overdrawn are “just irresponsible”.

      • Allwayswright says:

        When I was in college, I worked at a call center for a summer doing surveys. There were a lot of poor people there. Most of them were making enough money to live within their means, but they would buy stupid sh*t for their kids and or themselves and wonder why they couldn’t pay their light bill.

  2. PBallRaven says:

    He keeps it behind the filter in the air conditioning duct. Just like Walter White.

  3. quail20 says:

    Other reasons not to use a bank account? Hide income. Knew a couple back in the late 80s who hadn’t had a bank account for years because their business went bankrupt. They worked whatever jobs they could get and dealt in cash. The guy never filed personal bankruptcy. Never knew what happened at the end of those 7 years. My guess is that he waited out the creditors.

    • Necoras says:

      The whole point of incorporation is to let your business go bankrupt without hitting your personal finances. I suppose laws may have changed in the past 30 years, but losing your personal finances when your business goes belly up really shouldn’t be an issue.

      • Bsamm09 says:

        If you are not an established business with a great track record and credit it is very hard to have a loan in just the corp’s name. The bank will make one or all the owners personally guarantee the loan. If the business goes bankrupt, they may go after anyone who is liable.

  4. Quirk Sugarplum says:

    I’m afraid we can’t effectively comment on this post until we learn the details about this “secret DVD collection”.

  5. sir_eccles says:

    Can’t they just borrow money from their parents?

  6. Taylor Rolyat says:

    So what do these 10+ million people do when they receive paychecks, exactly??

    • pecan 3.14159265 says:

      Cash them. If most of them are in financial straits and don’t get a steady paycheck, it can’t be very high anyway.

    • highfructosepornsyrup says:

      What paycheck?

    • Necoras says:

      Cash. Or pre-paid debit card. Walmart will do either of those for you… for a nominal fee of course.

    • YouDidWhatNow? says:

      Take them to their employer’s bank. A bank will cash a check written from it’s own accounts when you present it to them. You don’t have to have an account – with any bank.

    • Oh_No84 says:

      These 10+ million ghetto people go to the local “currency exchange” or 7/11 maybe even some liquor stores to cash their checks for a fee.

    • Not Given says:

      You can get direct deposits put on debit cards.
      In this small town, the only non-bank place I know of to cash a paycheck is the grocery store. They charge 2%, you can get 1% back on a store voucher.

  7. Jevia says:

    Couldn’t live without a checking account to pay bills, but I don’t see the need in a savings account. It pays so little interest that I just take a few hundred a month and hide at home. At least I’ll have ready cash.

    • axhandler1 says:

      Until your house burns down…

    • dublinwolfpack says:

      Until you get robbed…

      • Jevia says:

        Getting robbed in my house is about as likely as getting robbed by the bank (or maybe less). And the robbers would have to find the safe and open it.

        Safe also addresses the house burning issue.

    • bityard says:

      A savings account isn’t meant to be a very good investment vehicle. It’s for keeping your money in a safe place. I like having a savings account purely because it’s one place that I can keep my money where I can’t deplete it with card swipes or by writing a check. If you want investments, talk to a financial planner about CDs, bonds, or mutual funds.

      Hiding cash at home is just a bad idea. Announcing it to the world on the Internet is an even worse one.

  8. Dagny Taggart says:

    Anyone who wants a checking account and has a job where they get an actual payroll check should check with their HR department. If they have the payroll checking account of their employer, many banks will offer free checking to the employees if they elect direct deposit. Some of them don’t even require a social security number.

    • binkleyz says:

      Agreed, and I’ll go one step further..

      I have a regular job, with a regular bi-weekly paycheck. I used to do all of my banking with Commerce Bank here in DE, but when they were bought out by TD and changed their ATM and checking account fees and policies, I decided to switch to an online-only checking account.. But what do to about those few occasions where I NEED a brick-n-mortar bank?

      The solution is easy, as it turns out. Most banks offer some sort of free checking account with a minimal balance (in my case, $100), so long as you have direct deposit going into the account. Note that they don’t say HOW MUCH has to go in there via Direct Deposit.. So now, each paycheck, $1.25 (yes, one dollar and twenty-five cents) goes into that account, which lets me retain a relationship with a “real” bank for those things I need locally, but without rewarding their crappy policies. I even have a monthly sweep set up to pull into my online-only account the $2.50, on the 5th of each month.

      • Jevia says:

        What was the change to the ATM and account fees from Commerce to TD? I’ve been using TD since it was Commerce and didn’t notice any difference. I pay no checking account fees (with the said $100 balance and direct deposit) and never paid any ATM fees unless I used another bank’s ATM (and then only pay that bank’s non-customer fee).

      • ChuckECheese says:

        So simple. Except that in many parts of the country, there are no banks offering free checking. Sometimes they’ll offer it to employees of a particular large local company as a promo, or to people over 55 or 60 years old. I can’t find a local bank anymore with free checking for people under 55 and an average monthly balance of under $10K. A few banks are bumping that minimum balance up to $20K.

        There are a few credit unions, but they never have very accessible branches or business hours.

        My current bank, Arvest, has no branches where I live now – AZ. I got the account years ago when living in OK, and kept it because there were no fees and the customer service was surprisingly good. Then I got a notice last month that Arvest will charge $6/month for checking and a bunch of other new fees, unless I have a combined $20K on deposit, or $25K in total accounts (loans, checking, savings, CDs, etc). I can’t find other local banks offering better deals. Some credit unions out here in Phoenix have reputations as smelly as any commercial bank. So I continue to look.

        • AzCatz07 says:

          I live in AZ, and I have three different checking accounts, none of which charge fees. Granted, one of them is USAA, but the other two are a credit union and US Bank, which holds my mortgage.

          • ChuckECheese says:

            USAA is on my short list and I’ll probably end up with them.

            Your mortgage qualifies you for the free checking. I don’t have a mortgage, so don’t qualify for a free checking account.

            I’d like to go the credit union route, but there are only 2 within 5 miles of my work/home, and they both have horrible hours (one closes at 5, the other at 5:30 weekdays, one is open until noon on Saturday, the other is not open).
            My current bank now requires $20K in balances or a loan, mortgage or investments totaling $25 to $35K to qualify for a free account.

        • room13 says:

          First Federal Credit union. I’ve had them for 10 years and have loved them.

    • dolemite says:

      It would be soooo sweet to have direct desposit. I work for a company that has been in business for about 30 years, has around 300 employees and does around 20 million a year. We still get paper checks. Apparently the reason is the accounting software is on some kind of 15 year old computer, and they refuse to upgrade or move to a different system that would allow for direct deposit.

      • CalicoGal says:

        That’s ridiculous!! I haven’t received paper checks in over 20 years, from any job!

        Your company needs to outsource that payroll mess to like ADP or something similar. It would save them money in the long run.

        • Martha Gail says:

          We don’t have direct deposit either. There’s 15 employees and because it costs $1.50 per direct deposit per employee (according to our boss’s wife who does our payroll) it’s too expensive and we can’t have it.

          We also get paid on Mondays. Any time it’s a bank holiday and a pay day, we don’t get paid until Tuesday. Something about that strikes me as illegal, but I really have no idea.

          • AzCatz07 says:

            Try a bank that has mobile deposit. I rarely get checks, but when I do I just take a picture of the front and back. USAA then credits the amount immediately into my account.

            I think Chase offers this as well, but I could be wrong.

          • NephriteStars says:

            That’s us too! Granted, our boss has like 300 or so employees in three stores, but yes, we get paid on Mondays too. So I have to wait until Tuesday to get paid if it’s a holiday. (I wait anyway…we get paid 2 – 3 hours after I get off…I don’t want to hang around to wait!)

      • Not Given says:

        My husband’s work is like that. They have an antiquated accounting system so bad that he bills his customers himself so they won’t have to wait 3 or 4 months until they have forgotten what the bill was for. They don’t have problem sending out the regular monthly utility bills, but anything extra seems to mess them up.
        We got a water heater through them a while back and I bet it will be a couple more months before it comes out of his paycheck.

  9. highfructosepornsyrup says:

    Seems to me you don’t need all banks offering free chequing – just one you can access reasonably. And if you can’t keep a bank account “funded” then you certainly can’t afford prepaid cards and whatnot.

    I can’t imagine that all these people CAN’T get bank accounts either. It’s probably that they’re taking a philosophical position on banks, or just ignorance about how the modern financial world works.

    • StarKillerX says:

      I know several people who can’t get accounts at any of the local banks, although this is because they they owe all the local banks money from overdrawing their accounts and similar issues and nope, I don’t feel sorry for them in the least as to a person it’s from trying to game the system.

    • AzCatz07 says:

      Once you get your name in that Telechex system, getting an account can be very difficult.

      My credit union offers second-chance checking to folks who can’t get a traditional account. I have no idea what the parameters are, but I’m sure there are fees associated with it since they’re taking a risk.

  10. Red Cat Linux says:

    The pessimist/realist in me says that the reason why is because they are living almost literally hand to mouth and/or are undocumented immigrants. Because that’s where some people are in the current economy.

    • dolemite says:

      There are many people at work that don’t seem to have bank accounts. I think they hide money from their baby mamas and the courts.

      • YouDidWhatNow? says:

        Wouldn’t work, unless they’re working under-the-table for their employer. IRS still gets the payroll info.

    • CalicoGal says:

      They’re living paycheck-to-paycheck. People who count literally EVERY dollar, and who are one missed pay away from being homeless.
      For example, you might hear one say, “Ok, today is Wednesday, I need to get to work tomorrow and Friday, and I need gas. I have 7.80 left til payday so I can put $5 in the tank and that will probably last til Friday. I’ll bring PBJ for lunch tomorrow and Friday, because I am saving up for an iPhone 5!!!”

      What a way to live your life.

      • dush says:

        Yeah, they live hand to mouth, paycheck to paycheck, because of their smartphone and cable and gym membership and smoking habit and coffee addiction, etc.

        • humperdinck says:

          Generalize much?

        • AzCatz07 says:

          You seem to have an erroneous “s” in your user ID.

          I have been there, and it certainly wasn’t because I wasn’t prioritizing my money. For me, it was because I was just starting out at my first job, paying for college, and living in my first apartment. I often worried about having enough gas to get to work before my paycheck would arrive. I ate a lot of ramen noodles back then, too.

          I’m glad I went through that because I now really appreciate my comfortable life. Maybe some struggle would’ve helped you gain a little empathy.

  11. lovemypets00 - You'll need to forgive me, my social filter has cracked. says:

    And there’s this:

    “And if you have a tendency to overdraft accounts and fees are $35 a pop, that’s really going to prompt you to not open an account.”

    Yep, that would do it!

  12. dush says:

    It’s always smart to keep a good amount of cash around in safe places in case of emergency.

    • HogwartsProfessor says:

      That’s true, if you can. In a disaster, the ATMs won’t work, and the banks aren’t going to be open. But anyone will still take cash.

      During the ice storm in 2007, the Walgreen’s near me was open even though they didn’t have any power. They were hand-writing receipts and taking checks, in the dark, so people could get batteries and stuff. It was crazy!

  13. yankinwaoz says:

    Another reason is that they are on a blacklist. If you ever bounced a check, your name is added to a national blacklist (can’t remember the service name). When you try to open an account, the bank can refuse if you are on the list.

  14. sir_eccles says:

    It’s pretty clear from some of these comments that many people here don’t have a clue how some of these 10 million people live their lives disenfranchised from the things we take for granted.

  15. Sarek says:

    I keep mine in my mattress. However, I have a waterbed.

    Liquid assets?

  16. Torchwood says:

    For the purposes of this article, isn’t a credit union considered a “bank”? After all, they have checking accounts like a bank, savings accounts like a bank, credit cards like a bank, right? Of course, they tend to be more local than some banks.

  17. Loias supports harsher punishments against corporations says:

    With interest as pittiable as it is, there isn’t a lot of benefit to keeping money in there.

    • JEDIDIAH says:

      Plus while banks may be insured, you may not see your money for a long time after a bank fails. In the meantime you are just plain out of luck. So having your money in the bank may not be so safe after all.

  18. Cor Aquilonis says:

    “[There’s a] declining availability of free checking…”

    Where is this happening?!? During my time in Indiana and Arkansas, finding free checking was never a problem. There are two billboards promoting free checking at two separate banks along the main road to my work. As a matter-of-fact, my current account is not only free, but also pay me 3% interest on checking balances up to $15,000, and savings pays 1.25% up to $30,000. I made almost $100 on interest last year on my 1099-INT. (Bank of Little Rock, for those who care.)

    Anyways, there’s plenty of free checking here. Anyone have lack of access to free checking in their neck of the woods?

    • ChuckECheese says:

      Expect your charmed situation to change soon, as Arvest will soon be charging fees on accounts under $10K in nearly all cases, and in many cases, charging fees under $20K. They want $6/month from me for basic checking (online check pay extra) if I have less than $20K in my account.

      • Cor Aquilonis says:

        Pooh-pooh to Arvest *waves had across nose to remove bad smell*

        I did some research, and it looks like there are other places one can get this type of account. It’s called a “Kasasa.” It looks like it’s some sort of third-party checking for smaller banks, and you can search for one by zip code. I’m not intending to spam for them, I just have had super-good experiences, and I think it’s relevant to a lot of commenter’s interests.

        Hopefully others can enjoy my charmed circumstances. :)

        • ChuckECheese says:

          What I implied in my post is that if one of the major players in your are (Arvest) decides to start charging for checking, you can expect the others to follow suit. It’s like reverse-competition!

    • Not Given says:

      We have 2 bank branches in town, one has free checking for seniors, the other has a free account with a minimum $100 balance. In a nearby town there is one with a high yield, no fee checking with 10 debit transactions and e-statements.

  19. PragmaticGuy says:

    What many of these non-bank people don’t realize is that fees on money orders or prepaid cards probably cost as much each month as having an account even if you have to pay the $7 month maintenance fee. I opened my first account over 40 years ago when I was making $50/wk and in college and have never paid a fee on it no matter where I banked. I’ll bet there are still a few banks where one could have an account and still not pay.

    • ChuckECheese says:

      1. Many people have easier access to money orders than they do to banks. There may be money order places on every corner, but banks might have too few branches in a given area. I’ve noticed that the more branches there are, the more likely you’ll pay fees to do business with that bank.
      2. If you can get to Walmart on payday, you can cash your check for $3. Some places (drugstores, others) have money orders for as little as 50&#162. This means if you don’t have too many bills to pay you might be able to do your banking for far less than $7 a month.

      I think your response shows what is wrong with politics generally these days, and why we are becoming so moribund in so many ways politically and socially. We are a large nation of over 300 million people. You will always be able to find exceptions to any rule or circumstance. Unfortunately, many people extrapolate their own circumstances to society generally, and make large mistakes thereby. Institutions (including politics) exploit these differences between haves and have-nots and prevent meaningful change from occurring.

      Your failure to see that many people have no access to affordable banking means they remain disenfranchised, because you are unable to grasp that many people, perhaps the majority, live differently than you do. In this case, the majority would be those people who have access to fee-free banking.

      This is also why we can’t get anywhere with health care reform. There are enough people of whatever rhetorical stripe needed to make any given point at any time. This means the real, basic problems, such as access and affordability, can be denied indefinitely.

      I can always find people who have access to affordable care, and in their selfish lack of empathy, they will claim no changes need to be made to the existing system. Indeed, politicians on the right are exploiting this by explicitly stating that people over a certain age (55) will see no changes to their coverage. The unspoken truth is that everybody else will get the shaft. See how divide and conquer works?

      • Not Given says:

        I think some Walmarts take utility payments. I remember seeing a sign in one about that. You can go in, cash your check, pay some of your bills there, buy money orders for the rest and get your groceries.

        • ChuckECheese says:

          Correct. Very convenient, and for many people, cheaper than having a bank account. I’d rather have a bank account personally, but I understand why others wouldn’t.

      • humperdinck says:

        Very well said, thank you.

      • Cor Aquilonis says:

        Related: I read an article recently where the author talked about a school program for disadvantaged kids that involved a field trip to a sit-down restaurant for the children and their parents. The instinctive middle-class response is “Really? What a waste of resources.” But, if you come form a background where you simply don’t go to sit-down restaurants, because you don’t know how and could never afford one, then you don’t know how to act and order in one. It’s very, very hard to enter into a new class without someone to mentor you in that classes folkways. It makes me grateful for my advantages in life.

        • ChuckECheese says:

          Well, okay. I’m not totally hating this idea, but it’s not very helpful to the recipients. It reeks of ‘noblesse oblige,’ and it reminds me of ‘take the poor to the opera day’ and other such.

          Yeah maybe a poor person doesn’t know which fork to use. But this isn’t the greatest of their problems – they’re tired and stressed and sick and without the ability to meet their basic needs on a constant basis. I recommend reading some Jonathan Kozol or Mark Rank to get a better sense of the problems and possible solutions.

          For example, a poor person would be better taught which schools are worth the time and investment, and which fields of study or which trades. Or how to access needed social services. You make this point at the end of your comment, where you point out the necessity of mentorship.

  20. NephriteStars says:

    If my bank started to ask for a fee to keep mine open, I’d have to close mine and just use cash and money orders. There are no other banks around that don’t charge. Thankfully mine is a local bank and only in Upstate South Carolina. So I doubt they’ll do tat.