I mentor a child for a volunteer program. One day his mother started asking me about which bank I like and which was the safest. I tried to explain FDIC insurance and how some banks offer ATM reimbursements and free checking. The mother was probably never exposed to banking services and may be suspicious of things like free checking. Just the fact that the mother was primarily concerned about safety is telling. I remember my father taking me to open up my first checking account at a young age. Some people never get that.

I also remember reading a profile some time ago about pay-day lenders (can't find the link but I think I saw it on HN). The profile actually brought up how the employees working at the pay-day lenders often times have a very personal relationship with customers. It makes sense since a lot of the same people are going back weekly. The terms are often very misleading if you're unfamiliar with concepts like APR and the market price for these types of services.

I am always interested when I see the ATM receipts left from those sketchy ATMs. More often that not, I see a $2-3 fee for a $20-$40 withdraw. I imagine people the people paying these fees think of it like a fixed fee and don't put it in context of percentage. Same holds true for pay-day lenders.

Interesting article about someone who, although economically disadvantaged, is able to be financially savvy. http://www.npr.org/blogs/money/2010/10/15/130595403/living-a...

In addition to whats listed, legal judgments, back child support, wage garnishment.

This is why expensive check cashing exists, its cheaper to pay 5% than having all 100% of it seized by a collection agency without your knowledge, leading to a raft of bounced checks and related check bouncing fees.

You pretty much get one shot with the economic system, and if you're ever kicked out, that's it, all done, forever, other than heartwarming anecdotes and the like.

A pretty decent Time magazine article outlining the basic reasons: http://business.time.com/2012/11/20/why-so-many-americans-do...

Strict proof of identity requirements can be an issue. Banks can be expensive at low balances due to fees.

If you owe tax debt the IRS can seize your bank account. So can a few other parties, most notably state tax authorities and child support enforcement agencies.

Bank fees, like overdraft fees, sting when money is scarce.

The banking reforms that took effect in 2010 have made it more difficult for banks to screw people with overdraft fees.

As an anecdote, less than two weeks before those protections went into effect, I overdraw my account. It was my fault, I lost track of my account balance and overdrew my account. I legitimately owed one overdraft fee. My bank, re-ordered the transactions for that day so that instead of merely overdrawing my account for one transaction, I overdrew it for five. I got a printout of my account activity and compared it to my purchases and figured out what they did. I called in and complained, they agreed to waive two of the five overdraft fees. I still ended up paying $90 for what should have been a $30 overdraft. I stopped doing business with that bank immediately. I have since switched to a credit union and have never looked back.

Community banks and credit unions are useful for the poor to get a foothold on financial stability.

I have a friend who, while not truly poor, is financially irresponsible and he has come to plan on paying overdraft fees every payday because he can't control himself for one month and not overdraw his account. I'm sure that his bank loved him, he was paying at least $60 per month in overdraft fees. He was actually upset that banks wouldn't default to offering him the "service" of allowing his overdrafts.

> The banking reforms that took effect in 2010 have made it more difficult for banks to screw people with overdraft fees.

The rules have changed but the game is still the same.

> I have a friend who, while not truly poor, is financially irresponsible and he has come to plan on paying overdraft fees every payday because he can't control himself for one month and not overdraw his account.

Sounds like he may be better off not having a banking account. It's easy to call someone irresponsible with this externally imposed money game, however there's much more important things in life than money. We should be focusing more on those things, make those things priority, & give those things more value.

>It's easy to call someone irresponsible with this externally imposed money game, however there's much more important things in life than money.

I take your point but my friend really is irresponsible with money.

For example, going shopping for "groceries" at the convenience store across the street because the 5 minute drive to the supermarket is too long or spending money at the bar when he knows that he has bills due before his next payday or putting off a utility payment or the purchase of required medicine so that he can buy... party favors.

You can be denied for a checking account. Most banks use ChexSystems to look up your account history.

I've known a small handful of people who were simply unable to open a checking account. They had to resort to all manner of ridiculous work-arounds, such as having friends deposit their paychecks for them. Even if you aren't taken advantage of by predatory businesses, it is a serious inconvenience.

Some had bounced checks in the past, which is somewhat understandable. Others had been the victims of fraud themselves, and were still trying to figure out how to convey that to the anonymous checking overlords.

Because poor credit history is worse than no credit history when it comes to trying to get a bank account.

do you need a credit history for a savings account or checking account with no overdraft?

That was certainly the case when I had a period of unemployment during the tech bust where I was paying bills with credit cards. I got a new job a year later (after Katrina), and went to a local bank, proud to be a productive member of society once again. I was told that I couldn't open a bank account here (I had relocated to be closer to family and so closed the other account), regardless of type. Went to another and got the same reaction. I ended up opening an account with a payday loan company for a debit card, and for a few years I was paying through the nose just to have a place to store my money.

minimum balance fees

depression. fear. uncertainty. lack of time. stress.