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.