Poverty in America: Millions of families too broke for bank accounts

Sabino Fuentes-Sanchez hid $25,000 all around his house because he didn't trust banks. Lasonia Christon receives her Wal-Mart salary on a pre-paid debit card. Kim James was homeless for most of the past decade in part because she had no place to save money.

There are plenty of reasons people still live all-cash lives, but the sheer number who do it might surprise you. At a time when the majority of Americans use online banking, and some even deposit checks using their cellphone cameras, roughly eight percent of America's 115 million households don’t have a checking or savings account, according to census data compiled by the FDIC.

The numbers are far higher among minorities: 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. Read more >>

Wal-Mart, Amex to Offer Alternative to Debit, Credit Cards

The two companies said Monday that Bluebird, which began during a pilot program late last year, will have no minimum balance and no monthly, annual, or overdraft fees. They said that the only fees that will be associated with the card will be transparent and within the user's control, such as out of network ATM withdrawals by consumers that don't have direct deposit.

Wal-Mart Stores and American Express view the card as an alternative to debit and checking accounts, which will help consumers better manage and control their finances. The companies say Bluebird was built on feedback from consumers, who said they were bothered by the rising fees related to checking accounts and debit services.

"Our customers tell us that they're tired of navigating a complex maze of do's and don'ts to avoid the ever growing list of fees found on checking products," Daniel Eckert, vice president of financial services for Walmart U.S., said in a statement. Read more >>

Survey: One-Third Don’t Pay Bills on Time

More than half of adults nationwide — 56 percent — have no budget and one-third don’t pay all of their bills on time, a financial literacy survey shows.

The survey, released Tuesday to recognize Financial Literacy Month, also revealed that 39 percent carry over credit card debt from month to month; two in five are saving less than they were a year ago and 39 percent have no day-to-day savings.

For the first time, the survey looked at how people use pre-paid debit cards. The results revealed that 72 percent use pre-paid debit cards to keep from spending money they don’t have, and 73 percent believe the cards are safer than carrying cash. More...

40,000 join credit unions in bank dumping protest

Image via WikipediaMore than 40,000 people joined credit unions during the "Move Your Money" and "Bank Transfer Day" movements this past Saturday, continuing the exodus of customers fed up with big banks.

The new customers were the latest in a surge of members credit unions have signed up in recent weeks, as public anger over proposed fees at Bank of America and elsewhere has boiled over, the Credit Union National Association said Tuesday.

"Since Sept. 29 -- the day Bank of America announced its now-rescinded monthly $5 debit card fee -- average estimated membership increases nationally were around 20,000 new members each day, " CUNA President and CEO Bill Cheney said in a statement. "On Saturday, consumers doubled the pace. It's clear that consumers kept up their interest in credit unions."

In a previous survey, released late last week, the industry group said an estimated 650,000 consumers had joined credit unions between September 29 and the first week of November, bringing with them an estimated $4.5 billion in new savings accounts. More...

New Bank Fees Push Thousands Into Credit Unions

Image via WikipediaLast Friday, after Bank of America's (BAC) announcement of new fees on debit cards, retired postal worker Victoria Lee took her adult daughters to her local USPS Credit Union. "[My daughters opened] free checking accounts with no charges for the use of debit cards," Lee said. Like many Americans who are carefully watching every dollar, the Florida resident said she was grateful to have an alternative to retail Wall Street banks.

Meanwhile, a record-breaking 3,200 new checking accounts were opened over the weekend at the Navy Federal Credit Union, the world's largest credit union with 3.7 million members and nearly $48 billion in assets. The weekend surge -- which crushed the previous high of 2,500 -- fits into a larger trend for the credit union, which serves the Department of Defense and active duty military. It has had annual growth between 6.3% and 6.7% since 2007, and is on track to record a 14% uptick in membership this year, said Tisa Head, the senior vice president of savings products. In addition to its fee-free debit cards and accounts, another driver for the year's projected double-digit membership increase has been the credit union's willingness to post pay early for active duty members who use the Active Duty Checking account. More...

Big banks hit customers with higher fees, and more of them

Image by Johnny Vulkan via FlickrThe nation's biggest banks are increasing many of their fees, adding new ones, eliminating debit card rewards programs and making it harder for customers to avoid paying monthly charges for checking accounts.

On May 24, Bank of America will raise the monthly fee on its most popular checking account from $8.95 to $12. On June 27, it will start charging customers a $35 fee if they overdraw their account by less than $10. And next year, the bank plans to replace its basic checking account with a new "essentials" account that comes with a monthly fee that cannot be avoided.

At Chase Bank, fees have increased for overdraft transfers, outgoing wire transfers and stopped payments. New customers that sign up for a basic checking account face a $12 monthly charge, up from $6. More...

Massive Bank fee ripoffs on reloadable prepaid debit cards

Image via WikipediaLast year, Michael Abukhader's 12-year-old son, Jacob, received a $30 NASCAR prepaid Visa card from an aunt who thought it would provide a convenient way to give him cash for birthdays and other events. But once Abukhader, who lives in Queen Creek, Ariz., reviewed the terms of the card, he closed the account.

The card charged a fee of $6.95 for the first purchase, plus a monthly fee of $5.95. Other fees included $2.50 for a withdrawal from a non-network ATM and $4.95 to replace a lost or stolen card. Abukhader explained to his son that after six months, the $30 card would contain a negative balance.

For Jacob, who was initially excited about having his own credit card, "It was a cold, cruel lesson about credit and fees and 'buyer beware,' " Abukhader says. "It was very sobering." Read more...

US Banks Steal $24 Billion from Customers in Extortion Racket

Image via Wikipedia

These banks wouldn't even exist unless we bailed them out. These people are low-life felons and crooks who steal in broad daylight with impunity as Barney Frank wags his fat, stubby little finger at them as if they were his unruly children. Despicable.

Raw Story reports US banks billed their customers 24 billion dollars in penalty fees for overdrawing their accounts last year, a 35 percent increase over the previous year, a study has found.

Rather than deny payment, most banks in the United States routinely approve transactions not covered by funds but charge customers an average fee of 34 dollars each time.

Fees are charged whether the overdraft is for five dollars or 50 dollars, under overdraft protection programs in which customers are automatically enrolled, the study found.

"Overdraft fees are most typically triggered not by checks, but by debit card transactions and ATM withdrawals that could easily be denied for no fee," said the study by the Center for Responsible Lending.

"These practices are especially alarming given that institutions automatically enroll consumers into this type of program, even when lower-cost forms of overdraft protection -- such as a formal overdraft line of credit or a link to a savings account -- are usually available," it said.

Some 51 million account holders have been billed for overdrafts at least once a year, and 27 million of them have been hit with the fees at least five times in a year, the study.

In 2009, experts expect fees to grow to 27 billion dollars.

Lawmakers have introduced a bill in Congress that would require banks to change their policies to allow consumers to decide whether or not to enroll in overdraft protection programs.