by Broderick Perkins
(11/3/2011) Erate Exclusive - The working poor don't have time to occupy Wall Street, or any other street, for the same reason they don't have time to allow banks to nickel and dime them further into the poor house.
And it doesn't take a rocket scientist to understand why. They need all the time they can get working to keep their households above water.
"Hidden or unexpected fees" were cited as the number one reason a group of working poor closed bank accounts in the last year, according to the Pew Charitable Trust's "Slipping Behind: Low-Income Los Angeles Households Drift Further From the Financial Mainstream.".
Pew interviewed Los Angeles-area working poor — those who are employed yet remain in relative poverty — and found those citing the fee issue as the reason for dumping banks, above job loss or lack of money.
The survey queried largely Hispanic, low-income households revealing a consumer power that's forcing Bank of America to think twice about charging new debit card fees and other banks deciding not to go there -- all without sitting in or camping out.
Hitting banks in the vault is a lot more effective than public urination.
"In today's economy, where every penny counts, more needs to be done to bring low-income families into the financial mainstream," said Susan Weinstock, project director at the Pew Health Group, which spearheaded the trust group's survey.
"This data points to a real need for banks to better disclose their fees in a concise, easy-to-understand format," she added.
Unfortunately, those in the survey who dump their banks live without a bank account are exposed to the risks of theft of unsecured cash and the high costs associated with the loan-shark like realm of alternative financial services (AFS) providers, such as check-cashing operations and payday loans.
The study notes a safe, affordable bank account enables families to save money securely, pay bills and better plan for their future financial needs.
Low-income respondents who left banking in the past year either conduct business entirely in cash (59 percent) or rely on both cash transactions and check-cashing institutions (26 percent).
The report said the ranks of the "unbanked," those without checking or savings accounts, increased, with more families closing bank accounts (13 percent) than opening them (8 percent) last year.
Among the reasons survey participants cited for leaving banks were expected or unexplained feesun (32 percent), followed by job loss or lack of funds (27 percent).
The report also found:
• Unbanked families find it more difficult to come up with the minimum balance needed to open an account. Fifty percent of the unbanked cite an inability to deposit the minimum balance as the primary impediment to opening an account, compared with 30 percent last year.
• People who are banked are more able to save and are less likely to suffer cash loss. Nearly all banked respondents (94 percent) keep at least some "extra" money in a bank account and nearly nine out of 10 (88 percent) have at least one savings account.
• Nearly one-fifth (18 percent) of people who rely solely on cash have been victims of cash loss, including theft. The average amount lost was $729, equal to nearly two weeks of the respondents' average household expenses.
"The Consumer Financial Protection Bureau (CFPB) can bring more families into the financial mainstream by issuing rules to make checking accounts safer and more transparent," Weinstock said.
"The bureau can require banks to issue a one-page disclosure of pertinent checking account information and stop the unfair practice of processing transactions from highest dollar amount to lowest dollar amount, which can lead to more overdraft fees," she said.