[heading]Banked & Poor: The Lose-Lose of Checkings & Savings[/heading]
As John Cheese at Cracked.com put it: “Being poor is like a game of poker where if you lose, the other players get to fuck you. And if you win, the dealer fucks you.”
As covered at SilverVigilante, more than 50% of Americans are probably at the poverty line. Cheese goes on to detail all of the ways in which the dominant financial system undermines the road to riches.
For one, you get charged for using your own money. You’ve got to have a balance. At many banks, a $50 balance (at least) is required. Interested in starting a business? Then for that you’ll need $100 more. Overdraft? Well, your meagre account likely will garner little sympathy from branch managers.
As Cheese puts it: “Because having a checking account while poor doesn’t just mean you have to be responsible and good at math — you have to be perfect.”
Here comes a $35 fine for charges putting you further in the red.
It is indeed the employees’ right to receive cash or money order from work. But, this then precludes one from free checking. So, dues come at the beginning of each month, upwards of ten dollars, for your accounts. If you wish to have a check casher process the pay, they can charge a considerable percentage. Some describe this as a “poverty tax.”
Are you fiscally responsible? Do you save? No credit? Well, even that can be a problem. Even Having no credit will stop you from getting a loan or an apartment as fast as having bad credit. Want Direct TV? Credit check. New place? Credit check.
So, credit must be repaired. Thus, you need a cell phone plan, as that qualifies as credit. So do utilities.
According to Pew Charitable Trusts, most people don’t know what they’re getting into when they open a new checking account.
It turns out, according to the report, people are not given enough information to be able to shop around based on fees and terms and conditions. In other words, due to hidden costs, they get pushed out of the banking system because disclosures are “poorly done or hard to read or too long, then people can’t shop around.”
For this report, Pew framed “best practices” as policies and procedures that:
Provide checking account holders with clear and concise disclosure about costs and terms;
Reduce overdrafts and eliminate practices that maximize overdraft fees;
Do not require all problems to be settled by binding arbitration, but allow other dispute resolution options .
Not a single bank provided all best practices or good practices in each on of these categories. 97%, however, had at least one best practice.
Pew aimed to survey the top 50 US banks, but data from 14 banks was unavailable online or via mail. A prospective customer or customer could only get this information by visiting a branch.