8 ms·

This comment on the article reflects why many people that I have met personally do not have checking accounts or bank accounts. They are worried about having mo

This comment on the article reflects why many people that I have met personally do not have checking accounts or bank accounts. They are worried about having money seized. From the comment section of the article -"If you would really like to know why poor people regular these establishments I'll tell you why: it's because they keep you off the grid. I used to have a checking account too all my life. But after I lost my job, even though I'm a fulltime single father, the "child extort" kidnappers levied my checking account several times. They just took money at will no questions asked. There was no rules stopping them and nothing I could do. The Sheriff of Nottingham might as well been barging in me and my daughters tiny apartment and stealing all of our shillings. So after the "child extort" agency did this 3 times, I shut down the account. And from that moment forward I just began to live off the grid using cash and money orders. "

pekk 13y ago
I assume this is talking about child support payments ordered during divorce proceedings?
- notahacker 13y ago
  Not having any paper trail to attract the attention of people and organizations you owe money to is arguably the only rational reason for being unbanked in an urban area of a developed country.
  - cryptoz 13y ago
    I disagree very strongly with that. Here are a few rational reasons that someone may choose to not have their money in a bank: - Moral conflicts. Most banks use your money for purposes that many people consider evil, so choosing to not give them your money is a rational choice. - Lack of trust. Many banks over the last century have run out of money and been unable to honour withdrawal demands/requests. It's reasonable and logical not to trust them to keep your money and give it to you when you ask. - Inconvenience. If you don't have very much money, having a bank account is a drain on your resources (fees, mostly) and your money is not immediately accessible. There are plenty of other reasons, too. Running away from people you owe money to is certainly not the only rational reason for not having a bank account.
    - woofyman 13y ago
      USA banks are federally insured, so there's no risk in losing your money. Running away from creditors is not a valid reason. They can sue you. They can't directly take your money.
      - cdh 13y ago
        Well, that's not quite true. There is always a small risk of losing some (or even all) of your money, particularly if you have a large amount in your account. Obviously that risk is very, very low for smaller amounts of money.
        bhickey 13y ago
        There are risks we should be concerned about, and risks we should not be concerned about. If you stuff money under your matress, the risk of losing it to a house fire or robbery are several orders of magnitude greater than losing it in a bank run. Assuming your account is under the FDIC limit, how could you lose money on an insured account? Suppose there's a massive bank run and the Fed has to print oodles of cash to repay depositors. This leads to runaway inflation that occurs over a very short period. If you could have otherwise exchanged your cash on hand for a different currency, sure you would have lost money. Compared with the actual risks of being unbanked, this is a hallucinatory concern.
      - woofyman 13y ago
        250k is the insured limit. You can open accounts in multiple banks if you have more cash than that.
    - _delirium 13y ago
      > Many banks over the last century have run out of money and been unable to honour withdrawal demands/requests. It's reasonable and logical not to trust them to keep your money and give it to you when you ask. Within the last century, yes, but quite far back within it: the last time anyone with modest amounts of money in the U.S. lost deposits in a bank failure was 1933, the year the FDIC was created. You can still lose money in a bank failure if your deposits are above the FDIC insurance limits, but poor people by definition would not have that much money, so it wouldn't explain their choice not to use banks.
  - bradleysmith 13y ago
    no slack in your income, and $35 overdraft fees are unarguably rational motivators to avoid big-box banking.
    - arjie 13y ago
      Even that great Satan, Bank of America, allows you to disable overdraft 'protection'. It's what I do.
      - rgbrenner 13y ago
        That was part of Obama's credit card reform in 2009. .. banks were required to offer it.
        arjie 13y ago
        Ah, I see. That's good regulation there.
      - clarkm 13y ago
        It doesn't work for ACH transfers though.
    - bradleysmith 13y ago
      just to clarify, I realize there are plenty of options within the 'big box banking' world that mitigate overdraft fees (well, a few options anyway.) What I was saying in the parent comment is that overdraft fees are a perfectly rational motivation to avoid major banks. I personally bank with both Wells Fargo and Bank of America (for convenience, and because several family members that are international do the same; gotta have that free transfer service). I am close with a few people that have foregone banking, and paid out of pocket to have their paychecks cashed where ever they can. As far as I can understand, this is a rational decision if your income does not provide the ability to meet a minimum monthly balance of about $100 of 'slack'. If you've ever worked a menial job for a regular period, I'm sure you'll understand. If your monthly balance variance is < ONE PAYCHECK +/- $50, a $35 overdraft fees represent a significant percentage of your income. These overdraft fees are a profit center for banks. Even if there are options to mitigate them, what motivation do the poor have to pursue them? The burden of proof of utility is on the banks, as far as the poor are concerned. If it seems to be more convenient or cheaper to operate without them, people will. This may be partly due to ignorance, but for the most part, it is because there are small inherent costs associated with a bank account that the middle class doesn't seem to recognize. You CAN operate with less expense with cashed checks and payment cards than you can with a bank account and a debit card. Hobos and junkies would not do so if it were not the case. Hard living makes people rational like a motherf*er. You may forego some potential interest incomes, bank protections, and countless conveniences associated with using a bank account, but when it comes down to brass tax, it just costs less.
  - aptwebapps 13y ago
    How about the reason given in TFA? If you're living on the edge, financially, cascading fees and fines from a single incident can cripple you.
    - notahacker 13y ago
      The rational response to concerns about crippling fees is to choose an account without a minimum balance or with low overdraft fees, or preferably no overdraft facility at all. Sure, people living on a financial edge are often less well-informed than the general public when it comes to understanding fees, but it's probably rare for the optimal solution to be paying 2%[1] of your meagre income to the nice guys at RiteCheck, or 20% if you've cashed a bad cheque in the recent past... or eye-wateringly high fees if you actually need to borrow some money
      - pohl 13y ago
        That may be a rational response, but you need better support for the suggestion that no other possible response is rational.
      - 6d0debc071 13y ago
        Basic bank accounts, i.e. the sort without credit, are very under publicised - and the bank staff don't, last I checked, have to tell you they exist.
      - dalke 13y ago
        You speaking of rational responses. You likely refer to the rational expectations hypothesis in economics. The default assumption is of course that everyone makes rational decisions, including the poor. Since they are making decisions that you don't think are rational ("it's probably rare for the optimal solution ..."), you conclude that the reason is that the poor people are less well-informed. This makes sense, so long as everyone has equal access to the same services, or at least access to the same services you do, and that there is competition among those services. However, as the author points out, the poor areas are under-served in terms of banking choices, and banks use "private databases like ChexSystems that currently keep more than a million low income Americans from being able to open accounts." Because of the obvious market inequality, you cannot conclude as you did that the people who use RiteCheck are making either an irrational decision or un-informed decisions.
  - deleted 13y ago
    [deleted]
  - belorn 13y ago
    Let me add a small story from my past. While studying, I was quite poor, and rarely had any reserve cash on me. In an effort to secure me against emergencies, I borrowed a small amount from a friend and put it in my bank account. It was not to be used except if the house burned down and I needed a motel or if some other unlikely event occur. After my studies was done, I was unemployed and thus went and sought some social security money to pay rent with. When the first check came in, it was reduced with the amount I had in the bank. TLD: paper trails are contextless, and do not always paint the correct picture. Giving the state this information can be quite costly on a personal level.
code_duck 13y ago
I was talking to my girlfriend last night and she mentioned how her ex-boyfriend doesn't have a bank account. He's actually well off financially, so I wondered why. Indeed, the answer is to avoid wage garnishment for child support.
- rwmj 13y ago
  I wonder what the mother and child think of this arrangement?
  - code_duck 13y ago
    I presume they wish the state had more effective means to redistribute the deadbeat's assets.
    - eriksank 13y ago
      Is it even his kid? It could also be the "works" of the new boyfriend ;-)
- protomyth 13y ago
  In many states, that won't work. The state just goes after the employer. A bank account is not a requirement for many states to grab your cash.
fiatmoney 13y ago
It's also not unknown for a state you used to live in to suddenly decide you owe them a large amount of taxes, and take it directly from your bank account.
- code_duck 13y ago
  Last year, to attend a tradeshow I opened a sales tax account and Wisconsin. As I was engaged in extended travels afterwards, and made no sales taxable sales at the show, I did not file any returns with them. If course, they expect you to file each quarter even if to report zero sales. When I returned it to my house nine months later, I found a wide variety of letters from them culminating in lien on my bank account for about $1500. Why they decided that I would have $10,000 in sales that were taxable, given on my history of never having reported anything ever on a brand-new account, I have no idea. Strangely, others at the show who also failed to ever file did not receive liens.

pekk 13y ago

I assume this is talking about child support payments ordered during divorce proceedings?

notahacker 13y ago
Not having any paper trail to attract the attention of people and organizations you owe money to is arguably the only rational reason for being unbanked in an urban area of a developed country.
- cryptoz 13y ago
  I disagree very strongly with that. Here are a few rational reasons that someone may choose to not have their money in a bank: - Moral conflicts. Most banks use your money for purposes that many people consider evil, so choosing to not give them your money is a rational choice. - Lack of trust. Many banks over the last century have run out of money and been unable to honour withdrawal demands/requests. It's reasonable and logical not to trust them to keep your money and give it to you when you ask. - Inconvenience. If you don't have very much money, having a bank account is a drain on your resources (fees, mostly) and your money is not immediately accessible. There are plenty of other reasons, too. Running away from people you owe money to is certainly not the only rational reason for not having a bank account.
  - woofyman 13y ago
    USA banks are federally insured, so there's no risk in losing your money. Running away from creditors is not a valid reason. They can sue you. They can't directly take your money.
    - cdh 13y ago
      Well, that's not quite true. There is always a small risk of losing some (or even all) of your money, particularly if you have a large amount in your account. Obviously that risk is very, very low for smaller amounts of money.
      - bhickey 13y ago
        There are risks we should be concerned about, and risks we should not be concerned about. If you stuff money under your matress, the risk of losing it to a house fire or robbery are several orders of magnitude greater than losing it in a bank run. Assuming your account is under the FDIC limit, how could you lose money on an insured account? Suppose there's a massive bank run and the Fed has to print oodles of cash to repay depositors. This leads to runaway inflation that occurs over a very short period. If you could have otherwise exchanged your cash on hand for a different currency, sure you would have lost money. Compared with the actual risks of being unbanked, this is a hallucinatory concern.
    - woofyman 13y ago
      250k is the insured limit. You can open accounts in multiple banks if you have more cash than that.
  - _delirium 13y ago
    > Many banks over the last century have run out of money and been unable to honour withdrawal demands/requests. It's reasonable and logical not to trust them to keep your money and give it to you when you ask. Within the last century, yes, but quite far back within it: the last time anyone with modest amounts of money in the U.S. lost deposits in a bank failure was 1933, the year the FDIC was created. You can still lose money in a bank failure if your deposits are above the FDIC insurance limits, but poor people by definition would not have that much money, so it wouldn't explain their choice not to use banks.
- bradleysmith 13y ago
  no slack in your income, and $35 overdraft fees are unarguably rational motivators to avoid big-box banking.
  - arjie 13y ago
    Even that great Satan, Bank of America, allows you to disable overdraft 'protection'. It's what I do.
    - rgbrenner 13y ago
      That was part of Obama's credit card reform in 2009. .. banks were required to offer it.
      - arjie 13y ago
        Ah, I see. That's good regulation there.
    - clarkm 13y ago
      It doesn't work for ACH transfers though.
  - bradleysmith 13y ago
    just to clarify, I realize there are plenty of options within the 'big box banking' world that mitigate overdraft fees (well, a few options anyway.) What I was saying in the parent comment is that overdraft fees are a perfectly rational motivation to avoid major banks. I personally bank with both Wells Fargo and Bank of America (for convenience, and because several family members that are international do the same; gotta have that free transfer service). I am close with a few people that have foregone banking, and paid out of pocket to have their paychecks cashed where ever they can. As far as I can understand, this is a rational decision if your income does not provide the ability to meet a minimum monthly balance of about $100 of 'slack'. If you've ever worked a menial job for a regular period, I'm sure you'll understand. If your monthly balance variance is < ONE PAYCHECK +/- $50, a $35 overdraft fees represent a significant percentage of your income. These overdraft fees are a profit center for banks. Even if there are options to mitigate them, what motivation do the poor have to pursue them? The burden of proof of utility is on the banks, as far as the poor are concerned. If it seems to be more convenient or cheaper to operate without them, people will. This may be partly due to ignorance, but for the most part, it is because there are small inherent costs associated with a bank account that the middle class doesn't seem to recognize. You CAN operate with less expense with cashed checks and payment cards than you can with a bank account and a debit card. Hobos and junkies would not do so if it were not the case. Hard living makes people rational like a motherf*er. You may forego some potential interest incomes, bank protections, and countless conveniences associated with using a bank account, but when it comes down to brass tax, it just costs less.
- aptwebapps 13y ago
  How about the reason given in TFA? If you're living on the edge, financially, cascading fees and fines from a single incident can cripple you.
  - notahacker 13y ago
    The rational response to concerns about crippling fees is to choose an account without a minimum balance or with low overdraft fees, or preferably no overdraft facility at all. Sure, people living on a financial edge are often less well-informed than the general public when it comes to understanding fees, but it's probably rare for the optimal solution to be paying 2%[1] of your meagre income to the nice guys at RiteCheck, or 20% if you've cashed a bad cheque in the recent past... or eye-wateringly high fees if you actually need to borrow some money
    - pohl 13y ago
      That may be a rational response, but you need better support for the suggestion that no other possible response is rational.
    - 6d0debc071 13y ago
      Basic bank accounts, i.e. the sort without credit, are very under publicised - and the bank staff don't, last I checked, have to tell you they exist.
    - dalke 13y ago
      You speaking of rational responses. You likely refer to the rational expectations hypothesis in economics. The default assumption is of course that everyone makes rational decisions, including the poor. Since they are making decisions that you don't think are rational ("it's probably rare for the optimal solution ..."), you conclude that the reason is that the poor people are less well-informed. This makes sense, so long as everyone has equal access to the same services, or at least access to the same services you do, and that there is competition among those services. However, as the author points out, the poor areas are under-served in terms of banking choices, and banks use "private databases like ChexSystems that currently keep more than a million low income Americans from being able to open accounts." Because of the obvious market inequality, you cannot conclude as you did that the people who use RiteCheck are making either an irrational decision or un-informed decisions.
- deleted 13y ago
  [deleted]
- belorn 13y ago
  Let me add a small story from my past. While studying, I was quite poor, and rarely had any reserve cash on me. In an effort to secure me against emergencies, I borrowed a small amount from a friend and put it in my bank account. It was not to be used except if the house burned down and I needed a motel or if some other unlikely event occur. After my studies was done, I was unemployed and thus went and sought some social security money to pay rent with. When the first check came in, it was reduced with the amount I had in the bank. TLD: paper trails are contextless, and do not always paint the correct picture. Giving the state this information can be quite costly on a personal level.

code_duck 13y ago

I was talking to my girlfriend last night and she mentioned how her ex-boyfriend doesn't have a bank account. He's actually well off financially, so I wondered why. Indeed, the answer is to avoid wage garnishment for child support.

rwmj 13y ago
I wonder what the mother and child think of this arrangement?
- code_duck 13y ago
  I presume they wish the state had more effective means to redistribute the deadbeat's assets.
  - eriksank 13y ago
    Is it even his kid? It could also be the "works" of the new boyfriend ;-)
protomyth 13y ago
In many states, that won't work. The state just goes after the employer. A bank account is not a requirement for many states to grab your cash.

fiatmoney 13y ago

It's also not unknown for a state you used to live in to suddenly decide you owe them a large amount of taxes, and take it directly from your bank account.

code_duck 13y ago
Last year, to attend a tradeshow I opened a sales tax account and Wisconsin. As I was engaged in extended travels afterwards, and made no sales taxable sales at the show, I did not file any returns with them. If course, they expect you to file each quarter even if to report zero sales. When I returned it to my house nine months later, I found a wide variety of letters from them culminating in lien on my bank account for about $1500. Why they decided that I would have $10,000 in sales that were taxable, given on my history of never having reported anything ever on a brand-new account, I have no idea. Strangely, others at the show who also failed to ever file did not receive liens.