No Credit Card, Savings, or Checking Account? You're Not Alone
Written by: Kristy Welsh
SCOTTSDALE, AZ--(Marketwire - September 27, 2010) Tried to open a checking account and been turned down? Can't get a credit card? These scenarios are happening more and more — moving people into the ranks of the unbanked and underbanked.
An "unbanked" person has no bank account of any kind: checking, savings, or credit card. An "underbanked" person has some sort of bank account but still uses services like check cashing, money orders, and payday loans.
"The recent proliferation in payday lenders and cash checking companies across America speaks to the increased population of people without access to bank accounts," says Kristy Welsh. She cites a September 2010 report by the FDIC — 7.7 percent of U.S. households are unbanked and 17.9 percent of U.S. households are underbanked.
"The biggest reason someone is unbanked is a history of bounced or unpaid checks, resulting in the consumer's information being added to ChexSystems," says Welsh. "ChexSystems is the main credit reference for the banking industry. Your inclusion in its rolls is the death knell on attempts to open up a bank account," she explains. "You're more likely to be underbanked if you aren't listed in ChexSystems but have bad credit," Welsh says.
Rising unemployment has contributed to the swell in the unbanked as consumers may bounce checks unintentionally and can't pay them back — and wind up in ChexSystems. Unemployment has also thrown more people into the category of underbanked. With the increase in defaulted mortgages and credit cards, the subsequent bad credit leaves consumers with less access to bank loans.
For consumers who find themselves without access to credit cards or banks accounts, there are alternatives. Pre-paid credit cards and secured credit cards may a good solution. Creditinfocenter posts a large list of these products on its website.
CreditInfocenter.com is a free one-stop destination for consumers looking for advice and tips on how to repair and rebuild bad credit and maintain good credit. The site promotes do-it-yourself credit repair and maintains many positive corrections can be made for the cost of a postage stamp. Kristy Welsh is also the author of Good Credit is Sexy, a tongue-in-cheek guide to managing your credit.