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CX Matiash/AP – In this May 6, 2012, photo, people use Chase ATM machines at a branch in New York. Americans stepped up their borrowing in May, helped by the largest one-month gain in credit card debt in more than four years. But overall credit card use is still well below where it was just before the Great Recession began. (AP Photo/CX Matiash)
Danielle Douglas 1:06 AM ET
Roughly 17 million adults are without a checking or savings account. Another 51 million adults have a bank account, but use pawnshops, payday lenders or rent-to-own services.
Stubbornly high unemployment and underemployment have placed millions of Americans in precarious financial positions, leaving them unable to absorb overdraft charges or minimum-balance fees.
In the past year alone, Wells Fargo, Capital One and SunTrust have alerted customers to pending fee hikes on checking accounts or have raised overdraft charges. Banks say service charges are needed to offset the loss of revenue from a cap on debit-card transaction fees imposed by the government.
“Banks need to have pricing and practices that consumers can trust and allow them to build wealth and have economic mobility,” said Deborah Goldstein, chief operating officer at the Center for Responsible Lending. “If the account fees will leave them worse off, then its going to be a challenge for people to use banking services.”
Banks say it is difficult to make money serving lower-income communities because the cost of managing their accounts outweighs the return.
“There has to be a recognition that there are costs to providing accounts and those costs have to be covered,” said Nessa Feddis, vice president and general counsel at the American Bankers Association. She estimated that it costs banks up to $300 a year to maintain a checking account because of expenses such as processing transactions.
National Community Reinvestment Coalition chief executive John Taylor argued that banks could make up some of that cost by the sheer volume of new accounts.
Feddis disagreed. “You can’t take a losing account and make it up in bulk,” she said. “You’re not going to spend money to lose money.”
Without access to traditional banks, Taylor said, Americans are susceptible to abusive practices at non-bank institutions and are likely to remain trapped in a vicious cycle of financial strain.
More Americans opting out of banking system – The Washington Post.
Filed under: General News
As posted by Laura Tyco on http://2012indyinfo.com/
Also of interest from Laura Tyco: http://galacticlauratyco.blogspot.ie/
2012-09-13 09:27:18
Source: http://2012indyinfo.com/2012/09/13/more-americans-opting-out-of-banking-system-the-washington-post/