While the White House continues to frame the current economic recovery as a slow but certain upward swing, there are other indicators which foretell a much more anemic recovery than analysts are letting on. Most of the middle class jobs lost during the recession are being replaced with McJobs, previously noted both here and here. And now comes the news that a subset of Americans are too poor to afford a bank account. According to NBC, roughly eight percent of America’s 115 million households don’t have a checking or savings account, and the numbers are even higher among African-Americans:
More than 20 percent of African-Americans and Hispanics are essentially left out of the American banking system.
Frozen in the cash-only past, they face myriad “kick-them-while-they-are-down” situations where getting money costs money. Banks typically charge $6 to cash checks. Want to secure an apartment? Fee-based money orders are the only option. Without credit cards, they must turn to triple-digit interest rate payday loans for emergencies.
Sixty percent of Americans who once held checking accounts can no longer afford them. Living paycheck to paycheck can result in overdrafts, which lead to overdraft fees. For Lasonia Christon, who was profiled by NBC, the cost was just too much to bear.
“There was an overdraft here and an overdraft there, and it just didn’t work out,” she said.
Other people who’ve been homeless or who don’t have good track records, or who haven’t had the necessary financial training, just opt out of the banking system altogether. But more often than not, being ‘un-banked’ in America is a consequence of being poor in America.