Millions of US households don't use banks. They should reconsider.
Banks and credit unions offer many services that save people time and money, but these conveniences elude 8.6 million unbanked households in the United States. Instead, these families rely on alternative financial service providers for basic transactions such as check cashing, which often come with hefty fees.
Unbanked households, which the Federal Deposit Insurance Corp. defines as those that don鈥檛 have an account at an insured institution, also miss out on helpful tools and services such as,听听补苍诲听.
Whether they don鈥檛 have a bank account by choice or circumstance, these people聽could save money and time by joining, or rejoining, the banking ecosystem. The reasons for not having an account vary, but each can be overcome.
They think they don鈥檛 have enough money
The main reason people don鈥檛 belong to a bank is that they think they don鈥檛 have enough money to maintain an account or meet a minimum balance requirement, according to an聽.
But it doesn鈥檛 always take a certain dollar amount to qualify for a bank account; many of聽don鈥檛 have initial deposit requirements. They also don鈥檛 have monthly maintenance charges, which means customers don鈥檛 have to keep their balances above a certain amount to avoid a fee.
Just as a retirement account is beneficial even if you don鈥檛 add thousands of dollars to it each month, so too is a bank account useful, even if it isn鈥檛 overflowing with cash. The account also provides access to mobile check deposit services, online bill pay and a safe place to store your money.
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They don鈥檛 trust banks
When less-than-stellar customer service is already testing your patience, finding out that one of the largest banks in the country opened聽聽might leave you on the brink of ditching the traditional banking system altogether. For some consumers, it鈥檚 enough to keep them from joining it in the first place.
Despite the headlines, your money is safer in a bank account than under your mattress. Most financial institutions are federally insured, meaning that deposits of up to $250,000 are backed by the U.S. government. What鈥檚 more,听聽and mitigating other online threats.
They think fees are too high or unpredictable
Costly fees keep some people away from banks 鈥� and it鈥檚 hard to blame them. If you were to pick a run-of-the-mill bank account that came with a $7.50 monthly fee, you could end up paying about $150 per year once you factor in a couple of $30 overdraft charges.
But there are solutions: free checking and savings accounts. Often, these accounts come from聽, which also have lower or no overdraft fees. Before you join a bank or credit union, take a good look at its fee schedule to avoid surprises.
Not having a bank account聽comes with its own steep costs. Prepaid debit cards, which some people use in place of a checking account, can have fees that total nearly $200 or $500 annually, depending on whether the card comes with direct deposit services, according to聽.
They have past banking problems
Some people鈥檚 past banking troubles, such as bounced checks or unpaid fees, keep them from being able to open a standard checking account. That鈥檚 where second-chance checking accounts come in handy.
These products may not come with all of the services offered by traditional accounts, but they eliminate the need to go to expensive alternative financial-service providers. Plus, if you use your account responsibly for six months to one year, you might be able to switch to a standard account.
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Banks are still the best deal
If you don鈥檛 have a bank account for one of these reasons, we highly recommend re-evaluating your stance. Banks and credit unions may not be perfect, but they鈥檙e far better 鈥� and cheaper 鈥� than your other options.
Tony Armstrong is a staff writer at NerdWallet, a personal finance website. Email:聽tony@nerdwallet.com. Twitter:.
