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Here’s Why Staying Unbanked Is Not A Good Idea At All

Do you really think that every single individual that you come across maintains a bank account to drop their paychecks and pay their bills? You will be surprised to learn that millions in the United States actually don’t have a bank account. As a matter of fact, they have got nothing to do with banks at all. A good percentage of those who have bank accounts are dependent on financial services like check cashing and payday loans from places outside a bank. In case you are just dragging yourself as far as your money matters are concerned, opening an account in a bank might not seem to be a good idea for you. But, if you want to improve your financial situation, staying unbanked is definitely not a good idea at all.

What Does Being Unbanked Imply?

Unbanked is a term that is used by the FDIC to refer to those families that don’t have a bank account or for that matter, an account in any financial institution. In 2015, nearly 7% of all the households in the United States were reported to be unbanked, while 19.9% were not appropriately banked or underbanked. This implied that despite having their accounts in a bank, they availed financial services from sources outside of the bank.

Therefore, more than 25 million families in the U.S. are either unbanked or underbanked. Being unbanked can have several financial disadvantages. You won’t be able to receive direct deposits from your employer if you don’t have a bank account. Also, you can’t build your credit history which you would need for borrowing money in the future. If you have your own bank account, you get to save money and can also avail of safe money transfers. Though the percentage of unbanked people in the United States has come down, millions don’t have a bank account.

Do People Prefer Being Unbanked?

The National Survey of Unbanked and Underbanked Households conducted by the Federal Deposit Insurance Corporation doesn’t only keep a track of unbanked people. Does it also try to find out why are they unbanked? In the survey that was conducted in the year 2015, 57.4% of the respondents stated that the reason behind them staying unbanked is that they don’t have a considerable amount of money to keep in a bank account. Some wanted privacy for their money, while others didn’t have trust in banks.

Some people prefer to stay unbanked owing to the exorbitant fees that banks charge for account maintenance. So, while on one hand, unbanked households are financially incapable of opening accounts in a bank, on the other hand, they are doubtful of how the banks will treat them as customers. While a lot of people are skeptical, they are unable to realize the greater benefits.

Is it Necessary to Open a Bank Account?

There are plenty of benefits that are associated with when you open a bank account. The federal government insures your deposits against loss. The range of benefits that banks offer, makes money management easier for you. After you open an account with a bank, you get a debit card. Along with that, you can deposit your checks for free and get access to ATMs.

Banking on the services that the banks offer, you can carry less cash. In the case of alternative lenders, you would need to shell out a fee while cashing your check. With banks, you do that free of cost. There are certainly long-term benefits as well. You can rake in interest on your balance amount depending on the type of account you choose to open.

How to Open a Bank Account if You are an Unbanked Customer?

Retail banking has experienced some swift changes and that has led to a sharp rise in the number of accounts that don’t charge exorbitant fees and put pressure on the wallet of a customer. In the case of online-only banks, customers don’t need to shell out minimum opening deposits and a high account fee.

As a result, customers won’t have to save before opening a bank account. If you are an unbanked customer, you wouldn’t even have to drop in at a physical bank since you can apply online through the websites of the online banks.

You have to provide your name, physical address, and also your driving license number or social security number so that banks can verify your identity.

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