November 5th came and went, along with much of the Bank Transfer Day buzz. By most accounts, the holiday was a success, drawing an average of 20,000 new members to credit unions nationwide every day through October, and doubling that number on November 5th.
But while Bank Transfer Day effectively inspired big bank accountholders to move their money to CUs, it may not have reached the unbanked: those who have no bank account at all and receive no services from any financial institution. Also left behind were the underbanked, a group that has some traditional bank accounts, but still uses the services of check cashers, payday lenders, and pawnbrokers.
In the US, about 21 million households are underbanked, while a full 9 million are unbanked. Being without a savings or checking account has serious implications, leading to high check-cashing fees, lack of access to loans, and an inability to save for the future.
So while Bank Transfer Day did a great job of educating people on their banking options and inspiring them to move their money away from the high fees associated with big name banks, the holiday largely left behind people who had no bank to begin with. But it doesn’t have to be that way.
Credit unions vs retailers for the unbanked
Credit unions, with their generally lower (or nonexistent) fees and barely-there minimum balance requirements, are a great option for unbanked people who have often been driven from banking institutions by sky-high fees and minimum balance requirements that exclude them. Community Development Credit Unions (CDCUs) go a step further by specifically targeting their services to low and moderate income populations, the same group that makes up the bulk of unbanked people. Around 70 percent of the unbanked make under $30,000 per year.
Article comments
1 - Jordan Richardson
Underbanked? Unbanked? Are these real words?
2 - Maurice
Sara - this article resonates with me. I have 5 kids and my last 2 are struggling. They have had severe drug problems and have spent a large portion of their lives incarcerated. My one son has been locked up since 8th grade and is only now trying to fit in with society. He has a job at a grocery store and makes minimum wage. The other day he told me he had $800 in his wallet. I tried to help him understand that he should really put that money in a bank.
I think there are many people like my boys that are naive about banking and handling money.
Thanks for a timely, informative article.
3 - Clavos
Underbanked? Unbanked? Are these real words?
Actually, yes they are, Jordan. I published this article, and wondered the same thing, so I looked them up. They are accepted terms in the banking industry.
Google them and you'll get dozens of hits.
4 - Jordan Richardson
You're overserious, Clavos.
5 - Balance Transfer Day
Look up Balance Transfer Day and give a call to Senator Sheldon. Voice your support to cap credit card rates 202-224-2921
6 - Clavos
Or, just possibly, you're not very good at expressing humor in pixels, Jordan.
Just sayin'...
7 - Jordan Richardson
That's an understatement, Clavos.
8 - Clavos
Or, just possibly, you're not very good at expressing humor in pixels, Jordan.
Just sayin'...