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How to Move from Unbanked to Banked

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Blank CheckbookOne of the trends on the rise recently has been an increase in the number of consumers who are unbanked. There are several reasons that people join the ranks of the unbanked. No matter the reason, though, the truth is that being unbanked can have some serious drawbacks — and cost even more than bank fees.

If you are unbanked, it’s probably a good idea to consider joining the ranks of the banked again, if possible. You’ll likely save money, and you’ll have access to other services as well.

Why are You Unbanked?

The first hurdle to clear is to answer the classic question: Why? Is there a reason that you are unbanked? Some of the common reasons that people are unbanked include:

  • Upset about paying fees, or feel as though they can’t pay the bank fees.
  • Non-citizens might find it more difficult to jump through hoops to get a U.S. bank account.
  • Can’t qualify for a bank account because of a ChexSystem issue, or because the bank runs a credit check.

Think about why you are unbanked, and whether or not there are ways to overcome some of those hurdles. In most cases (illegal immigrants are an exception), it’s possible to overcome most of the issues associated with being unbanked.

Why You Should Consider Becoming Banked

The truth is that being unbanked is costly. It’s not just about avoiding fees that some banks my impose on their customers. In many cases, the unbanked pay their share of fees as well. Check cashing fees, fees related to prepaid debit, and other expenses that come with transferring money through MoneyGram or Western Union can start to add up over time. Some estimates put the fees paid by some unbanked at a rate of close to $1,000 a year, depending on what replacement services they use, and how often they use them.

In many cases, it’s actually more expensive to be without a bank than to be with one. Really look at the costs you have to manage your money without a bank. Additionally, consider your opportunity cost. When you’re unbanked, you don’t have access to interest yielding deposits, or other accounts that can provide you with a way to actually grow your wealth.

Becoming Banked

If you decide you want to move from the ranks of the unbanked into the ranks of the banked, you need to address the issue that is most holding you back. Perhaps the most difficult hurdle is qualifying for a non-citizen bank account. It’s possible to get a U.S. bank account as long as you are in the country legally, but you should contact the bank ahead of time and find out exactly what you need to do in order to qualify. You might need to jump through a few more hoops.

For those who are disgusted with the big banks, or who don’t want to pay the fees, it’s worth noting that there are plenty of options. There are a number of free checking accounts and savings out there. And, thanks to technology, it’s also possible to work with online banks, or choose smaller banks or credit unions. You can get the benefits of solid banking services, without the costs associated with some of the bigger banks.

Finally, if your issue is one of credit rating or ChexSystems, you will need to take steps to improve your situation. Consider finding a bank that doesn’t use ChexSystems. You can call and ask, or you can look online to find lists of banks that don’t use ChexSystems. Then it won’t matter if you have a black mark. If your credit score is the issue, look for a bank that doesn’t check your credit to open an account. Or, you can work to improve your credit score.

In the end, it’s probably possible to qualify for a bank account, and it’s probably a good idea. There are plenty of local banks and credit unions with good practices who are willing to take your business.

(Photo: heidielliott)

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5 Responses to “How to Move from Unbanked to Banked”

  1. Christian L. says:

    Miranda,
    What are your thoughts on going to the same bank/credit union as your family? Is there more flexibility, more options when you do that because of your family’s loyalty?

    Thanks.

    -Christian L. @ Smart Military Money

    • govenar says:

      It could qualify you for some credit unions that you wouldn’t otherwise qualify for.
      And if you have a large amount of money at a bank, they may waive fees on other accounts associated with yours.

    • Anon Y Mous says:

      Of **course** if you’re unbanked, one should join one’s family’s credit union. I sometimes think that many people are just too lazy to look into the credit union alternative — there is one for just about any group of people. Contact the National Credit Union Assocation for a CU locator: http://www.ncua.gov/Pages/default.aspx

  2. bewisetoday says:

    The banks have really done this to themselves by being greedy. People are moving to credit unions and/or to an all cash system rather than pay excessive fees. B of A got the last of my money last year with their overdraft policies (debiting the largest item first, then smaller items or holding items). People are moving “off the grid” more ways than one.

  3. MrCoffeecup says:

    Back in the early 60′s my Father gave me great advice: “Son, when you start your finances with a checking and savings account, always develop a relationship with the Branch Manager.”
    Asking why this is so important, he explained that “you are dealing with a huge financial institution, they need to know about you!” But, I don’t have that big salary and savings that’s important to them. Answering: They see that now, but later on you may very well become very wealthy. They need to help you become successful”. Always develop a personal relationship with the managers.”
    That advice has saved me thousands, obtained preferential treatment, forgiveness and lower loan rates.
    Today, you start with a hello and introduction. Let them know about your life(plans, work, goals, objectives) and ask, “what can you do for me?”.
    (ex. Hi I’m newly married, or just starting college, or beginning a new job.., wanting to find out how to buy a car, or need new appliances.etc.etc..Can you help me?
    They deal in reality and in future prospects. Any banker who rebuffs you or isn’t interested….move your money to someone else.
    My point being, a banker, is there to assist you in making your financial future prosperous…because they earn money from you on loans, on deposits, on savings, on almost everything. So make them your ally. And barter or bargain your way into freebies..! You won’t know until you ask for it. Remember this old adage: You will NOT GET WHAT YOU DESERVE, YOU GET WHAT YOU NEGOTIATE !
    How to tell the BS standard pitch from real help.
    “Mr/Ms Banker I find your checking account fees to high, and no I really don’t believe in “prepaid debit cards”. How can you help me”? What sort of college, or newbie deals do you have? We’ll how about the first 6 months free and then as I grow in my job…I can get a better handle on fees”?
    My mom or dad is a military veteran…can I qualify as a dependent for free checking?
    Think and then listen to the bank VP or Manager carefully. Take his/her business card if you don’t find what you are looking for right away. Then contact them about better benefits at a less convenient bank across town. Ask the Bank Mgr to match the deal….Bargain because they do just that all day long.

    And now the balance of the comment: Cash is King, debit cards are for the lazy and the frightened.
    Honestly, how many people in your immediate circle have been held-up, robbed, mugged, messed with etc.etc.? Unless you live in a very scary part of town, pay cash(coin of the realm) as they say. And demand discounts for this. Why, because the merchant must pay .25-50 cents for each card swipe of a debit transaction.
    Ask for it to be take off the top of the price for paying in good ol Amerikan Money.
    Carrying $80.00 in cash to pay for incidentals will be easier and far less dangerous than using a “debit card” for the same transaction. Cash is King. Ask for discounts if you shop with restaurants(no not mikeyd’s)dry cleaners, service places, clothing stores.
    I get discounts all the time because I ask for them and pay with cash. Doctors love cash and they will discount services for “cash”.
    Try it, you’ll like it and save huge amounts of dough!

    The timid tremble, and the prosperous ask for a better deal…and get it 3 out 5 times. Prove it for your self.


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