U.S. Lags G-7 in Bank Accounts as Poor Can’t Build Assets

[xchrom]

http://www.bloomberg.com/news/2014-11-11/u-s-lags-g-7-in-bank-accounts-as-poor-can-t-build-assets.html

Marissa Austin Tobin has lived most of her 37 years without a bank account.

“I was irresponsible,” said Austin Tobin, who lives in Louisville, Kentucky. “I would pay my bills, but I would just spend the rest of my money.”

She needed to establish a financial history to qualify for a loan to start a catering business, so Austin Tobin opened accounts this year under a “Fresh Start” banking program that aims to help those who had mismanaged finances. Her savings, while still limited at about $500, are growing.

That’s not the case for some lower-income households as the world’s largest economy lags behind other developed nations in banking participation. The share of the U.S. population 25 and older with a savings or checking account was 91 percent in 2011, lower than any other Group of Seven nation except Italy, based on the latest available World Bank data. That compares with 98 percent in Canada and the U.K. and 99 percent in Australia.

A less inclusive financial system cuts into people’s ability to prove creditworthiness and build assets, making it more difficult for households to get ahead. The costs of alternatives, including check-cashing operators, payday lenders and nonbank money-order suppliers, often borne by those without accounts, also exacerbate wealth inequality.

[liberal N proud]

1. The Koch Brother plan is working...

Turning America into a third world nation.

Land of the haves and the have-nots and nothing in between. One day everyone will work 7 days a week 12 - 15 hours a day and for wages that will not sustain a living. They will not have health care or a retirement plan, no social security, no savings. You will just get old and die.

Your only option when you are young is to sign up for the military and go fight another war for the rich over oil or some other resource.

That is the utopia that the likes of the Koch's want for this great land.

Welcome to the New America!

[Divernan]

2. There you go; trashing Hillary's BFFs!

I take issue with you on one part of your otherwise astute post. You state, "You will just get old and die." Au contraire! Fewer and fewer Americans will reach "old age", i.e., old enough to claim Social Security. Like other third world countries lacking universal health care, death rates will increase for younger Americans. They'll have died at earlier stages of life from lack of healthcare from pre-natal on, plus working themselves to death, exposure to environmental toxins, lack of regulations of food safety and workplace safety.

Charles Dickens could write a helluva novel about life in today's U.S.

[shraby]

3. Part of the reason is a person has to have at least a hundred dollars

to even open an account, and if it isn't "active" a fee is charged until there is no money left in it. A poor person can't put much in there at a time or very often and has no incentive to save at all under these conditions.
When I was much younger, my brothers and I used to put literally pennies in our bank accounts at a time. Which wasn't often because we never had much money. We were taught in that way to save money, which can't be done for children today..or poor people.
Also the interest rate they paid was sure better than less than 1% that's paid now.

[central scrutinizer]

4. If all you have is $100

getting to $110 is impossible. If you have $100 million, getting to $110 million is inevitable.

[kickysnana]

5. 90+ Senior in my apartment needed expensive new glasses and new dentures.

They were not covered on any insurance she has. She planned to put them on a credit card and slowly pay it off. Her family said no Ma/Grandma we will pay for it. Tell us how much is and they told her how much and they put that money in her bank account to pay off the bills when all was done.

Unfortunately the "all said and done" involved delays and stretched over into the next month and she was notified that she had too many assets and that she would be losing her help to pay Medicare Premiums, Life Line for phone, food stamps, Meals on Wheels (they only supply 2 meals a day max), metro mobility for doctor appointments, her rent subsidy, heating assistance and Life Line with a waiting period to reapply. She did not think of this and her kids did not know about this.

Lots people are afraid that something like this will happen if they have a bank account. It is not like you are given a warning either before or after the fact and seniors hardly ever do face to face with workers any more it is all phone and paperwork.

She has no idea how she will survive and may have to move in with her kids, something none of them wanted.

There should be exceptions for things like this. Nobody was trying to game the system just allow her to get much needed vision and dental care. What monsters would deny her that?

Also about 2007 during a Medicare shake up another resident had double Medicare premiums being taken out of her bank account. It took a Senator and 6 months to get it stopped. There was literally nobody in charge to fix it. Medicare blamed the contracted biller. Contracted biller said they were only doing what they were told.

FYI. The limit is $2000 assets total. When dental care, car repairs and rents can run thousands it is unrealistic and has not been changed since the 1980's. And you need only to carry over a $2000.50 balance from one month to the next and you are ruined. The government tells American they should have 3 months emergency cash except if you are poor enough to need help. People still believe emergency help from the county is available for such things but that ended a long time ago.