Why So Many Americans Don’t Have Bank Accounts

[jeffrey]

At a time when you can pay bills online and deposit checks remotely using a cell phone, it’s amazing how many Americans don’t have bank accounts. One in nine households is without a checking account.

And almost one-third of the population is underbanked — lacking the full range of basic financial services. Going without such services is not only inconvenient but also expensive. Someone who cashes paychecks or benefit checks at a check-cashing service and pays bills with money orders may end up spending more than $500 a year for transactions that would cost no more than $120 at banks that offer basic checking accounts...

Why So Many Americans Don

[disneysteve]

If they are living paycheck to paycheck, they may not be able to wait for checks to clear.

Each individual transaction costs relatively little, even though cumulatively they can add up to many times what a basic checking account would cost.

I think these two items have a lot to do with it. I know many people who need to cash their paychecks the instant they get them, to the point of leaving work on their lunch break to do so. If they happen to be off on Friday for some reason, they will make a special trip to come to the office to get their check. They can't wait until Monday. I can't imagine living that way but lots and lots of people do, apparently unable to survive for 2-3 days without their paycheck.

I think the second statement speaks to a whole host of financial problems. People don't think about long-term costs. They only think about immediate costs. "I can cash my paycheck for $10." They don't think about the fact that doing that every 2 weeks means spending $260 over the course of the year. It is just like people going out for lunch. Sure, $5 might not seem like much, but do that every day and you spend $1,250/year.

[Nika]

Other top omitted reasons are:

1). They overdrew an account and are in the chex system
2). They owe money (child support, taxes, creditors) and want to hide their paycheck.