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No Checking or Savings Account? How to Survive Without Using a Bank

Written by: Kristy Welsh

Last Updated: September 11, 2017

In a press release issued by the FDIC (Federal Deposit Insurance Corporation) in October 2016, the number of U.S. households without a bank account fell significantly in 2015 to seven percent — the lowest in the survey's history. Even with this good news, not all demographic groups saw a decrease. Unbanked rates for Asian households increased from 2.2 percent in 2013 to 4 percent in 2015. Why are there still so many people without bank accounts? Because too many people still do not have a credit score and access to financial services necessary to buy a home, build a business, or send children to college. Many studies have given credence to the theory that checking and savings accounts are not right for everyone. At the end of this article, we will give you some tips on how to find the best services for operating without a bank account.

Unbanked and Underbanked Consumers

What do the terms Unbanked and Underbanked mean? An unbanked person is someone with no bank account of any kind: no checking, savings or credit card. Underbanked means a person who has some sort of bank account but still uses services like check cashing, money orders and payday loans.

These unbanked and underbanked consumers represent a considerable market opportunity for financial services companies. The unbanked and underbanked bought upwards of $3 trillion of goods and services with cash and money orders. Too often, these consumers pay a premium to get access to their funds at fringe financial outlets.

Who is Likely to be Unbanked or Underbanked?

Generally low income people do not have checking accounts, while low to middle income people are more likely to fall into the underbanked segment.  Job loss, income decrease or loss, lower education, and younger Americans seem to be the demographic composition of those who fall into the unbanked or underbanked categories.

Walmart has been adding financial services designed to cinch its relationship with the unbanked by recently offering a new prepaid debit card for its "credit-challenged" customers. Walmart is providing a one percent cash back bonus for consumers who use its prepaid Visa to buy gasoline, another step in its long, concerted effort to build loyalty among lower income consumers.

Reasons Why People are Underbanked or Unbanked in the U.S.

  • Distrust of the banking system.
  • Cannot maintain sufficient balances to avoid high monthly fees.
  • Write too few checks to need a checking account.
  • Have too little income to justify a savings account.
  • The decline of bank branches in many lower-income and inner-city neighborhoods has made a banking relationship inconvenient for many consumers.
  • Have no Social Security Number. Believe it or not there are 20 million adults in this country who do not have a Social Security Number.

Tips for Using Un-banking Services

If you are one of the millions of Americans not tied into the banking system, you can do business using other methods. Just be careful as there are a lot of businesses willing to prey on you and others so keep these helpful tips in mind:

  1. Need a Loan — You can use Peer-to-Peer lending sites, which require no credit. Some of the big ones: and VirginMoney. There's also GreenNote, which provides alternative student-loan funding sources such as friends, family and alumni.
  2. Check Cashing — Walmart offers check cashing for a $3 per check flat fee. If you compare this with checking account fees of $10 per month and you are paid twice a month, check cashing may be a cheaper alternative to banking. There are many check cashing stores around that will charge mush higher fees. Make sure to know the fees up front before you cash your checks.
  3. Alternatives to Credit Cards — A great alternative to a credit card is a prepaid card. Shop around online to find a card with the lowest setup fee (yes, there is a setup fee involved.) You can get one online and reload it, or buy one from a store. This way, you can use plastic instead of cash.
  4. Debit Cards — There are debit cards tied to non-banking financial institutions, such as PayPal. This may be a good option for those who buy and sell online.
  5. Secured Cards — Secured credit cards are available from various banks. Your credit limit depends on your deposit (any bank will give you a savings account as long as you have 2 IDs — it's a checking account which is difficult to get).
  6. Checking Accounts — You can find a list of non-ChexSystems banks listed on the internet. This just means these banks will not pull a ChexSystems report on you before giving you a checking account. That may be a good thing if you have had a rough time with another bank.

Banks and credit unions are rapidly addressing the problem of unbanked and underbanked households in the U.S. by developing checking and savings accounts targeted towards low-income households. These new products will hopefully help these consumers and save them money in the long run by offering financial services with lower fees.