Having a bank account is not always the norm
KANSAS CITY, Mo. — Going to the bank, checking your account on the phone, cashing a check, transferring money to another account — it all feels like daily errands. But for 15% of Kansas City homes, that’s not the norm.
KSHB 41 News looked at what it’s like to be unbanked and the downsides that come with it.
Tamika Davis is proud of two things:
“A mother. Hard worker,” Davis said. “That’s about it. I work and I’ll be a mother.”
There were times when Davis worked three or four jobs at a time to support her daughters, but she always struggled to save money.
“They would be part-time; some would be full-time. It was like all I did, yeah, for a while was work, work, and everything I earned went to pay for bills,” Davis said.
Because of this, she had a back-and-forth relationship with banks. For a while, she didn’t have a bank account at all.
“It would get to a point where I can’t keep enough money anymore, so I’m closing accounts or whatever,” Davis said. “And then I could afford one – well, I think I could afford one – then open another.”
Davis was like 7 million other households in the United States who don’t have a bank account.
The Federal Deposit Insurance Corp. Survey 2019 shows that the two main reasons people don’t have a bank account are that they don’t trust the bank and they don’t have enough money to maintain the account.
Communities of color, low-income families, and less educated people are more likely to be unbanked. Without a bank account, it can be more difficult to establish and grow credit, achieve financial goals, access loans, and run daily errands.
“Check cashout locations, I would use it,” Davis said. “Or either my prepaid cards would be direct deposits.”
The FDIC says unbanked people are more likely to use prepaid cards than those with bank accounts. These cards are easy to obtain, but they incur additional fees and do not accumulate credit.
Often someone can’t pay certain bills or make purchases online with a prepaid debit card, which means people have to take the time to pay their bills in person.
CHES inc.a non-profit financial empowerment organization, is one of the institutions participating in the solution – a new initiative called Betting on Kansas City which helps low-income people open a bank account.
“These are accounts with very low minimum opening balance, as well as zero or very low maintenance fees, so whatever you bring to the bank, you can get a bank account and have access to the different advantages that it offers you,” said Justin Walker, Director of Business Development for CHES Inc.
Bank On partners with more than a dozen banks and metro organizations that will help people open an account.
“It reinforces that financial relationship of trust. So when it comes time to buy a house or buy a car, save for retirement, or consider your child’s education, you already have that financial partnership. trust in place,” Walker said.
Walker said he wants to make that option more attractive than resorting to a predatory payday loan service that charges outrageous interest fees and often traps people in a cycle they can’t get out of.
The Unified Government of Wyandotte County and Kansas City, Kansas is working alongside CHES Inc. through the Bank On initiative.
“A lot of times individuals may not have grown up in an environment where it was part of their daily lives, so it’s just an opportunity to try to incorporate that to give a legacy to their family,” said said Bridget. Cobbins, UG’s deputy county administrator.
Trust is a big hurdle. Communities of color have always been discriminated against in banking institutions, and the feeling of uncertainty carries over.
“I have a few friends,” Davis said. “They don’t deal with banks.”
Black and Latino households are more likely to be denied or not receive as much credit as they requested. However, the outlook is improving.
The number of unbanked Black households fell from 18.5% in 2015 to 13.8% in 2019, and the number of unbanked Latino households fell from 16% in 2015 to 12% in 2019.
Davis worked with Women’s Employment Network about their financial goals. She now has a bank account that helps her save for retirement and an emergency fund, as well as create a generational legacy for her daughters.
“It means a brighter future, and I’ve fought and fought to get here,” Davis said. “I’m glad it came to this, and I’m trying to teach them about money now.”
Although the number of unbanked households has declined in the Midwest since 2009, the numbers have increased here in metro Kansas City, from 5% in 2015 to 6.2% in 2019.
Initiatives like Bank On still have work to do.
The 2019 FDIC survey showed that 64% of people who have never had a bank account are not at all interested in opening one.
Two Americas is part of a KSHB and Scripps signature issue to help introduce our community to the America you know and the America you may not know. Our role as media is to share the news of the day, but we also seek to give voice to people we don’t often hear about.
Of course, there are many parts that make up our community, so we’re not showing you just two and we’re not pitting two sides against each other. Instead, we hope to highlight solutions and present different perspectives to help us better understand our region’s culture, our region’s past, and why our community feels the way it does today.