A large number of Americans do not have or use traditional mainstream financial products like checking or savings accounts.
In many cities, such as Los Angeles, almost every family has a checking or savings account, but in places like East St. Louis, Illinois, more than half of the households or unbanked or underbanked.
Unfortunately, in cities like ours, in a state that protects predatory lending companies, too many residents are still being ripped off because of a lack of familiarity with banks or nervousness about protection of their money, leading them to rely on check cashing services or payday lending companies.
Memphis ranks #5 among large cities (more than 100,000 households) for percentage of unbanked and underbanked people, respectively 16.7% and 28.1%. Shelby County is #7 among largest counties with the highest percentage of unbanked people – 14% unbanked and 25.8% underbanked.
Unbanked means no checking or savings account. Underbanked means no account but continues to rely on alternative finance services like check-cashing services, payday loans, rent-to-own agreements or pawn shops.
Top 10 Unbanked Large Cities:
1. Miami – 20.1% unbanked and 21.4% underbanked
2. Detroit – 20% unbanked and 29.3% underbanked
3. El Paso – 17.4% unbanked and 25.7% underbanked
4. Cleveland – 17% unbanked and 25.41% underbanked
5. Memphis – 16.7% unbanked and 28.1% underbanked
6. Dallas – 15.6% unbanked and 26% underbanked
7. Houston – 15.4% unbanked and 25.6% underbanked
8. Buffalo – 14.9% unbanked and 23.8% underbanked
9. Philadelphia – 14.3% unbanked and 23.5% underbanked
10. Baltimore – 13.9% unbanked and 25.4% underbanked
National Average: 7.7% unbanked and 17.9% underbanked
Top 10 Unbanked Counties:
1. Hildalgo County, TX – 21.6% unbanked and 27.1% underbanked
2. Bronx County, NY – 20.8% unbanked and 27.2% underbanked
3. Cameron County, TX – 20% unbanked and 26% underbanked
4. El Paso, TX – 18% unbanked and 26.1% underbanked
5. Miami-Dade County, FL – 14.4% unbanked and 20.8% underbanked
6. Philadelphia County, PA – 14.3% unbanked and 23.5% underbanked
7. Shelby County, TN – 14% unbanked and 25.8% underbanked
8. Kings County, NY – 13.9% unbanked and 22.5% underbanked
9. Dallas County, TX – 13.6% unbanked and 25.4% underbanked
10. Harris County, TX – 13.3% unbanked and 24.7% underbanked
Cities with Most Unbanked Census Tracts:
Of the top 100 most unbanked census tracts,
7 are in El Paso, TX
6 -are in Cleveland, OH
3 are in Cincinnati, Dallas, Memphis, and Montgomery, AL
Note: of the top 5 unbanked census tracts, Nashville has #3 – 41.4% unbanked and 35% underbanked.
Source: FDIC Survey of Unbanked and Underbanked Households
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Another example showing just how poverty stricken Memphians barely get by. The poverty in this city is staggering!
This is not a issue. Memphians have been ‘unbanked’ for a considerable period of time. Poverty probably has a lot to do with it. But clearly, there have to be positive incentives to keep people from opening bank/credit union accounts. The process of opening and maintaining an account in a world with changing addresses and without regular electronic access may make banks intimidating. Also, monthly fees may seem high, even though many unbanked people use loan-sharks with higher fees.
Also, the amount of dirty money — from crime, from drugs, from unreported income — may be significantly higher in Memphis (as a proportion of all money) than in other parts of the country. The other high unbanked cities would seem to be areas of dirty money also.
So the solution may be more difficult than having credit unions work harder to get new accounts.
We went to mention that there are banks that don’t charge monthly fees for accounts, which would eliminate the rip-offs for poor families cashing checks at non-financial institutions. Also, people carrying large amounts of cash are frequent targets for robberies.
Also, we were reminded about the new program set up by Shelby County Trustee David Lenoir and Memphis Mayor A C Wharton to address this issue: http://www.bankonmemphis.org/about.html