The Cost of Being Unbanked – NBC Boston

When Andrew Ramsay returned home after serving 28 years in federal prison, he was excited to move on with his life. However, Ramsay – who was granted a compassionate release last year after being convicted of murder for profit racketeering at the age of 18 – has been met with resistance.

“There was no help for me as an individual coming back from incarceration,” he said.

Of the many things Ramsay had to do once he was reintegrated into society, he said, getting a bank account was among the most difficult. Many banks require official documents, such as a driver’s license, to open an account. After being incarcerated for more than half his life, Ramsay only had an ID card when he was released.

“If you come home after being incarcerated and you have no ID, what can you do?” said Ramsay.

Ramsay eventually got his own bank account, started construction work, and found a path to financial well-being, but only with the help of nonprofits Emerge, which helps formerly incarcerated people, and Bank On Boston, which helps people find affordable banking services.

In partnership with Boston University’s Justice Media Computational Journalism co-lab, NBC Boston examined how Boston city dwellers struggle to connect with financial institutions.

In 2019, about 6% of adults living in the United States were unbanked – meaning they did not have a checking, savings or money market account – according to the Federal Reserve’s report on the economic well-being of American households that year.

In the same year, 16% of people aged 18 and older in the United States were underbanked, meaning they had a bank account but used alternative financial services, such as check-cashing facilities.

Every two years, the Federal Deposit Insurance Corporation distributes its own survey to a sample of households representative of the American population. In 2019, he found that minimum balance requirements and lack of trust in banks were the main reasons why people avoided them.

Michael D. Andelman, program manager for Bank On Boston, which is part of a national coalition of organizations that work with municipalities and communities, including the Mayor’s Office for Financial Empowerment, said the organization encourages people to use financial institutions.

“Having money in a financial institution is safer than having it on you,” Andelman said.

In Boston alone, about 10% of households are currently unbanked and 20% are considered underbanked, according to the Mayor’s Office for Financial Empowerment. This can put them at an economic disadvantage, limiting access to other useful services like ATM cards, credit cards, lines of credit and other services.

Amanda Cordero, who does not have a bank account, said she thinks the convenience of check cashers outweighs the cost.

“I come here because it’s faster,” Cordero said. “It’s easier.”

There can be many costs associated with opening a bank account. In 2019, 34.2% of unbanked households were concerned about fees, according to the FDIC survey. In the same year, banks with assets of $1 billion or more charged customers $11.68 billion in overdraft fees, according to a report by the Center for Responsible Lending.

In recent years, many banks — including Bank of America, Capital One, and JPMorgan Chase — have eliminated or reduced their fees.

The FDIC has not yet finalized its 2021 investigation and declined a public records request to provide statistics on the data. Andelman hopes that the number of unbanked households will continue to decline in the next survey due to the elimination of fees and the expansion of banks.

“When I started with Bank On Boston, there was one financial institution that offered a Bank On ‘certified account’. Now there are eight,” he said. “The playing field is getting a little more even.”

For more information on Bank On Boston, click here.

To produce this article, NBC Boston partnered with Boston University’s Justice Media Computational Journalism co-lab, a collaboration between BU Spark! program, the College of Communication and the BU Hub Cross-College Challenge. Contributing students were Jeremy Ahdoot, Melissa Ellin, Kyle Kamali, Gagan Kang and Yefei Yao with the help of professors Osama Alshaykh and Brooke Williams.

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