The "UnBanked" and Online Credit Card Purchases

[incrediBILL]

[nytimes.com...]

Lacking a bank account imposes limitations on a person’s financial options, said Greg Kato, policy and legislative manager of the Office of the Treasurer-Tax Collector in San Francisco. He said that check-cashing fees at the fringe institutions could total $1,000 a year and interest rates for loans are as high as 425 percent. And there are related issues: those without a bank account cannot rent a car, buy plane tickets online, mortgage a house or make any purchase that requires a credit card.

Interesting article, very accurate on most parts, except one, about the credit card stuff.

Anyone can get access to online transactions that require a credit card by purchasing a prepaid Visa debit card that can be reloaded over and over again. The problem is, you need money to put on the Visa card in the first place, and if these people that are "unbanked" had money they wouldn't be "unbanked" to start.

That's the big misinformation part of the article that I just had to get off my chest is that anyone can make a purchase that requires a credit card, assuming they have the money, because the unbanked certainly isn't going to get actual CREDIT to make the purchase.

The other potential silliness is the concept that the unbanked have internet access, computers, etc. which is a frivolous expense for those living on the fringe.

Of course they could always head down to use the computers at the public library assuming they can afford the transportation costs to get there...

Once you're on the fringe, things get difficult, life sucks, and online purchases are probably the last thing on their minds.

[lucy24]

I have a two-word answer to all those "unbanked" stories:

CREDIT UNION

No monthly fees. No cost for ATM card-- which doubles as a credit card for purchases, both online and in person. No charge for online or telephone access. Minimal overdraft charges.* Possibly a small initial deposit, but once you've put it in, you simply forget about it. I think if you write a whole lot of checks they start charging, but I never do. (Put it this way: I just opened a new box of, I think, 200 checks. They're printed with the address of my old apartment, which I left almost 2 and a half years ago. I thought it would be thrifty to buy two boxes at once.)


* If I goof on a check, they transfer exactly $100 from savings, less $5. This is one of several options that you can choose when opening the account.

[incrediBILL]

* If I goof on a check, they transfer exactly $100 from savings, less $5. This is one of several options that you can choose when opening the account.

I'm suspecting too many goofed checks is the problem as credit unions were mentioned in the article, they lost those accounts too, which can happen if you keep bouncing checks and don't have savings to cover it.

[piatkow]

The other potential silliness is the concept that the unbanked have internet access, computers, etc. which is a frivolous expense for those living on the fringe.

Frivolous? There are hardly any job ads in the papers that I read any more. If you want a job you have to go on line.

[incrediBILL]

Frivolous? There are hardly any job ads in the papers that I read any more. If you want a job you have to go on line.

Picking on words, gotta read the whole post.

There are FREE options to get online which I already mentioned, like the library for starters. If you can score an old laptop that has wifi, which most more recent laptops do, then getting online with any public wifi is also an option.

Like I said, paying for the internet connection is a frivolous expense when you're on the fringe as there are alternatives which are FREE. The options may not be as convenient as using the internet in the comfort of your own home, assuming living on the fringe people still have their home, but free internet access is certainly available.

And my point wasn't about jobs, it was about using Credit Cards online, and the author said it wasn't possible to do online CC purchases by the unbanked. My point was to debunk that as I proved with a prepaid Visa card it's totally possible to buy online, or anywhere else a CC is required, if you can afford to buy whatever it is you need in the first place. If they won't take cash in hand that piece of prepaid plastic will take care of most problems that require plastic vs. paper.

How I know this is it's how my daughter did it, with a prepaid Visa, when she first moved out on her own. Unlike other parents I wasn't co-signing squat and putting my credit at risk to be ruined by anyone, not even my own kid, not happening. However, I had no problem putting cash refills in her prepaid Visa or prepaid phone card if she needed some dough. Obviously I'll help my kid with financial issues but not at the expense of my own credit and financial well being and prepaid Visa was the solution.

[piatkow]

Of course the unemployed are still disadvantaged as a pre-pay card always carries a fee whereas if you are in work you can get credit and debit cards free.

[lucy24]

I think that's where we came in. Check-cashing services-- and then turning the cash back into money orders for bills that can't be paid in person-- add up to far more money in the course of a year than it would cost to have a bank or CU account.

I can't be the only one reminded of Terry Pratchett's disquisition on how it costs more to be poor than to be rich, with policemen's boots as the illustrative example...

[incrediBILL]

Of course the unemployed are still disadvantaged as a pre-pay card always carries a fee whereas if you are in work you can get credit and debit cards free.

How does this differ from paying interest monthly on credit card balances?

You don't have to be unemployed to be disadvantaged, just have bad credit and if you're going to use the CC or Debit card there are almost always fees unless you pay it off monthly.

Also, being unemployed doesn't mean unbanked because being jobless and broke, while often mutually inclusive, have exceptions for those smart enough to save money along the way.

[piatkow]

How does this differ from paying interest monthly on credit card balances?

I pay my card off in full every month. I haven't paid any interest for over 10 years.