An estimated 10 million American households — about 8 percent of all households — are “unbanked” and one in five households — 24 million households with 51 million adults — are “underbanked.” These are households which don’t have accounts at banks and other mainstream financial institutions and use cash for most of their transactions. As a result, notes the FDIC, these “cash consumers pay excessive fees for basic financial services, are susceptible to high-cost predatory lenders, or have difficulties buying a home or otherwise acquiring assets.”
The highest unbanked and underbanked rates are found among non-Asian minorities, e households, younger households, and unemployed households. Close to half of all households in these groups are unbanked or pared to slightly more than one-quarter of all households.
One of the mon reasons people have for avoiding checking accounts is overdraft fees. If you write a $10 check and it “bounces” (fails to clear because of lack of funds) most banks will charge you a $35 per transaction fee. According to the Consumer Financial Protection Bureau, the average overdraft fees paid per bank customer was $225. If you make less than $20,000 a year, you can easily find yourself paying one percent of your annual salary on overdraft fees alone.
To help serve the unbanked, Wal-Mart and Green Dot are launching GoBank, a “checking account product available exclusively on the retailer’s shelves.” The new service will have no minimum balance requirements or overdraft fees. It can even provide some of the online services, such as the ability to instantly send money to other bank customers at no charge via email or text message.
While such services are taken for granted by most people with a banking and PayPal account, they can be radically new and useful for the poor who are unbanked. States with more Wal-Marts also tend to have a higher percentage of unbanked households so pany is likely to find a high degree of demand for the services.
Wal-Mart is frequently the target of criticism from both the left and the right. Yet as pany, Wal-Mart has done more to improve munities than almost any other for-profit venture in America. While many corporations simply give to charities as their only form of service, Wal-Mart continues to find innovative ways to make a profit by helping the working the poor.