Bank Transfer Day proved that consumers can fight back. Fed up with bank fees, hundreds of thousands of people closed their big-bank checking accounts and opened new ones at not-for-profit credit unions. The movement was sparked by Bank of America’s $5 debit card fee, which demonstrated clearly that the bank would put its shareholders first and its customers second.
But let’s be honest. For most of us, the debit card fee is a nuisance, not an insurmountable obstacle. Though the money moved out of big banks’ coffers spoke loud and clear, one group remained silent: those who were already driven out of the banking system altogether by high fees.
The unbanked are disproportionately poor, and are more likely to be low-income and without higher education. Already in difficult economic straits, the un- and underbanked are bled dry by payday lenders, check cashers and loan sharks. They are the people most in need of credit unions, but the Bank Transfer Day movement has mostly passed them by.
Bring in the unbanked
In that spirit, we are working towards an Unbanked Transfer Day – a concerted effort to provide affordable financial products to those outside of the traditional banking system.
Providing low-cost check cashing, prepaid debit card and similar products solves one half of the equation: the high fees that the unbanked pay for services that we take for granted. But it doesn’t address what could potentially be a larger issue: without access to a retirement account, savings account or just a place to keep money safely, it’s harder to save and plan ahead. Being cut off from the traditional banking system doesn’t just affect how you spend, it also hurts how you save.
So while new efforts from Wal-Mart, Regions Bank and the like (may) help to lower the fees that the un- and underbanked pay, it doesn’t address the long-term consequences.
Credit unions: checking and savings, on the cheap
Credit unions offer a far more sustainable solution to the difficulties of the unbanked. Not only do they offer debit cards, check cashing services and online bill payments for free, but they also offer savings, retirement, 509 accounts and the like. Checking accounts can be the gateway to loans without exorbitant interest rates, affordable and reasonable credit card terms, and financial security down the line.
Most credit unions also come without the high fees associated with large banks. Many have no-strings-attached free checking, and will even reimburse ATM fees (one of the most-cited reasons that people leave the banking system is out-of-network ATM charges). What’s more, many have no minimum balance requirements – another typical reason for leaving or staying out of banks is the minimum deposit needed to open an account or avoid fees.
Not-for-profit credit unions are a sustainable solution to the hardships of the un- and underbanked: they address not only the immediate costs of alternative financial service providers, but also the long-term detriments of life without savings accounts.
What can you do?
NerdWallet will offer our support to nonprofits, credit unions and social services organizations who make a concerted effort to educate the un- and underbanked about solutions within the traditional banking system. Through membership drives, community outreach and education, we can put more people on the path to financial security.
- Join our list of credit unions with low or no minimum deposits and no checking account fees
- Host an unbanked membership drive, and reach out to low-income areas within your field of membership
- Show your support. Spread the word on http://www.facebook.com/theunbanked, post on your credit union’s Facebook page, write on your website, or tweet @theunbanked.
- Share your expertise. We’re looking to you for advice and suggestions, and we’d love to hear your ideas.
- Host an unbanked membership drive in partnership with a local credit union. We’ll help you find and contact credit unions in your area.
- Partner with other nonprofits to spread the word. Here again, we’re happy to help in any way we can.
- Increase awareness by teaching financial literacy to your community.
You’re the ones we need the most. In the end, we’re people helping people. Send us your suggestions, ideas, and comments on Twitter at twitter.com/theunbanked or on Facebook at http://www.facebook.com/theunbanked.
- Canvas for credit unions. In tandem with credit unions, find an area where you can talk to unbanked households one-on-one and spread the word about alternatives to high-fee banks. NerdWallet will help you find a local credit union and support you in your outreach.
- Learn more. Here’s some startling research and news coverage:
- A recent survey of the unbanked from the FDIC
- The FDIC’s Economic Inclusion initiatives
- Technology and the unbanked, from UNC
- Policy recommendations to help the unbanked from the Brookings Institution
- Make your voice heard. Facebook (http://www.facebook.com/theunbanked), Twitter (twitter.com/theunbanked), the blogosphere, everywhere that we can get the message out. Do you have a personal experience you’d like to share? Let us know!
- Spread awareness. Credit unions lack the marketing budgets of big banks. Let’s reach out to the community and let them know about not-for-profit financial institutions.
- Pissed off about bank fees? Let someone know. Senator Dick Durbin and Jack Reed called on banks to disclose checking account fees. Call your elected officials and let them know that you’re in favor of transparency, too.