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Subscribe to RSSInstead of looking to traditional institutions or check-cashing stores, millions of low-income Americans are instead turning to their local big-box retailer for their banking needs, according to a report in The Washington Post.
The newspaper reports that Kmart, Best Buy and Wal-Mart are all testing and rolling out in-store banking services ranging from check cashing and money transfers to bill-payment services.
The attraction for these retailers is the $320 billion industry of alternative financial services that the newspaper report says has long operated in the shadow of the formal banking system and under the radar of federal regulators.
Demand for alternative services is expected to grow as strict new rules force banks to charge higher fees for checking accounts, placing them out of reach of many financially strapped households, the Post notes.
The article cites a recent government survey that shows nearly 30 million households either do not have a bank account or scarcely use one. Some 70 percent of families who are considered “unbanked” earn less than $30,000 a year and many say they will never do business at a bank, the paper said.
These households have usually used a hodgepodge of services to manage their money, and retailers have started to realize that those same consumers are shopping in their stores, the Post said (Wal-Mart, for example, has said that one in five of its customers doesn’t have a checking account).
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The days of the "brick and mortar" banking institution are numbered. With technology, most retail banking needs can be handled outside the building. Local banks are closing "right and left," just part of the changes in our traditional lifestyles.
It's not exactly true, brick and mortar banking is not going anywhere.
But, the days of ridiculous fees are over.
There are many different ways to save on banking, doing it in your grocery store is not the only way (and not necessarily the most effective). Read more here:
http://bit.ly/hw6DYD
That part about people leaving banks because of "higher fees" is a joke. Have you seen how much these "alternative" places charge to cash a check, pay a bill or give a 30 day loan?
Not only are electronic payments free at my bank, but if the bill can not be paid electronically, they will print a check, put it in an envelope and mail it for free. I go online and do everything and don't pay a penny. If I went to those other places, I would pay through the nose.
The reason many people use these services is they left a bank with an overdrawn account and are on a black list and no other bank will allow them to open an account. So they are stuck, simple as that.
I work at a smaller community bank, Ed, and you are exactly right.
the banking institution did this, either by design or by evolution... the days of brick and mortar banks with 12+ teller windows with only 1 or 2 actual tellers is gone... now the banks inside my grocery store have three teller windows and usually 2 or 3 real tellers there...
its a matter of accounting.. why have a big ass building when you are only going to put in 2 employees
I can go to BOA and pay $10 to say hi to a teller or $3 to go to wal-Mart.That is a hard choose for poor people.
I think BOA charges 10$ for a money order, even if you bank there, wal mart charges 30 cents here
Well then go to walmart for a loan, a credit card, mortgage and car loan.
Need2haveavoice: It's not a bad idea. If banks will not give you a single penny anyway. Unless you're another bank, of course. Otherwise, you're screwed. From 'losing' your refinancing papers while they will send your house to auction, to charging you a fee for using another bank other than the one you have your mortgage with. Banks became like the mob. They'll both kill you, the only difference is that the bank is not that messy.
I think that banks are going to be servicing the business sector, and these big-box services will take care of lower and middle-income Americans. It's a logical step for places that want to be a one-stop shopping experience, the same way the in-store bakeries and pharmacies provide convenience to busy shoppers.
Remember the days of Savings & Loans? That is the sector that will probably still stay with traditional banks, unless the S&L makes a comeback. Banks have always been designed with the business client in mind, not Jane and Joe America who don't make enough money to play with the big guys. There's money to be made for a market segment that caters to lower-income households to provide banking services, and the big box stores are smart to go after a share while providing another convenience to their shoppers.
dht923nh- Of course, when have you seen banks really caring for the customers?
It won't be long beforethe 'company' store will be back in vogue...work here...cash here...spend here...die here
Would you like that in cash, or in Wal-Mart bucks?
So, its my understanding that only low income persons shop at such box stores? I find that hard to believe given the fact I have financially well off friends who use in store banks when they shop. Of course Neiman Marcus and Saks Fifth Avenue is a little far from them.
The reason I am relatively financially comfortable is because I pay attention to detail. If I need cash (& to be honest I can't remember the last time I carried cash; I stopped when my kids became teenagers) the I use the cash back facility at the supermarket. It is a lot cheaper than the combined ATM fee from both banks. I freely admit I am a rate whore and will swap financial institutions at the drop of a hat (or a % point). They have no loyalty to me nor I to them. Of course these retailers can't offer everything to everyone, nor can a bank.
The trick, in my humble opinion, is for both institutions to at least try to accommodate the entire spectrum of customers, however I do admit, some customers will never have an account as they probably couldn't get a library card, let alone a credit card.
Ophelia, please read before commenting next time. The article does NOT say 'only' low income Americans shop in these stores; nor does it say ANYTHING about in store banks. It refers to these big box stores offering banking services themselves, similar to how you can cash a check at your local grocery store, not at the on site bank, but at the customer service counter. The statement that you quoted there is merely mentioning that these folks don't/won't use a traditional banking service, and the check cashing companies completely gouge their customers, so they are using the retailers as a cheaper alternative to the check cashing companies without having to use an actual bank. And yes, in this scenario, it is mostly low income folks.
Ophelia, that is not what they are saying at all, but I guess you can twist it into whatever you want.
The fact is that most "financially well off" people have bank accounts, and as the article stated, "Some 70 percent of families who are considered “unbanked” earn less than $30,000 a year and many say they will never do business at a bank"
My brother makes 40K a year and is on the bank black list because he stopped using an account and he wound up owing 400 in charges. now he is not allowed to open an account at any bank for the next 3 years.
How about credit unions ?
Auto 101, I'll bet that your brother stopped using the account becuase it was overdrawn. That is the only reason he would be denied opening an account... unless his credit sucks - in which case that could be a reason, too, pending on where he went to open another account. I would suggest a smaller community bank because you are looked at as more of a person rather than just an account number. Additionally, your brother may make 40K a year, but that doesnt mean he pays his bills.
He actually had 200 in it because he was looking to change his bank and they just charged maintenance fee ( he switched banks but forgot about the 200 ). but he moved to a new area and closed his account at the small local bank to go to another local bank but BOA took out all 200 with maintenance fee's then they started to charge overdraft fee's since there was no money for the maintenance fee. this is why he left BOA in the first place and they shaft him once more.
Ah, the good old days; cashing your check at the "Furr's/Safeway National Bank".
Up here in Canada we have a bank that is in-store in our supermarket and I have been banking there for 10 years...They have awesome perks such as no fees ect for banking transactions. I will never go to a regular bank after doing this.
The government regulated the banks on how they could gouge us and now the banks are coming at us in other ways. I'm with Regions Bank in the Southeast and they now want to start charging $60 annually for a checking account. Its just another way of gouging the public. As I told the lady yesterday, "You big banks will force all of us to put our money back in our mattresses". Thirty years of free checking accounts and the banks don't care that you close the account and won't pay them. What a joke.
Regions is not a "big bank" man. It is a little bank.
Chase is charging $ 25 per month for not having direct deposit in your account. Do they qualify as big bank?
CREDIT UNIONS PEOPLE!! I used to work for one years ago and never closed my account. I can walk into ANY credit union in the country and use it as a branch. I will NEVER patronize a bank as long as I can help it!
This article states that people aren't using banks at all. A lot of the comments indicate that people are reading it as people are using in-store bank branches. Wal-mart and the others have created they're own "faux bank" with pre-loaded debit cards and check cashing services along with discounted bank type services such as money orders. Interesting story if most could read it as it is written instead of stating that in-store banks are really convienient.
I make over $70K and retired. I would rather bank at walmart cheaper fees, get prepaid bank card no one stealing your data nor money and can get all my shopping, banking and gas rom one stop. Financial institutions are a total mess, waste money for number working and rob you with fee's for overhead cost.
Next time you need a mortgage or a car loan, try Walmart.
I used usaa i did,nt fool with the va , I have used credit unions in the past.
As for cars research and save then pay cash.
Russell L Klosinski Very True!
Although the running joke in town is that as long as you don't need the money they will be happy to loan it to you.
At the same time looking on the bank tracking site I notice none of the local banks are in bad shape at all! (-:
What's your point or are you just being an ass? The only reason the government keeps restrictions in place that keep walmart out is because it would force all of these crooked banks to reform the way they do business or face extinction. Why not put your money in a mattress? Nothing like working hard for your money, and then having your bank charge you to have access to it. I have always used a Credit Union for this sheer fact and while you still have fees they are generally a lot less.
Russell , They have all of those too !!!
Sure- in due time. Walmart has its branded credit card, loans and morgages will follow as soon as the government removes the current restrictions.
"Next time you need a mortgage or a car loan, try Walmart."
Don't be surprised if Walmart gets into the mortgage or car loan business! It certainly is big enough to compete.
"Next time you need a mortgage or a car loan, try Walmart."
Don't be surprised is Walmart gets into the mortgage or car loan business!
I bet if you make over 100K or more, banks will let you bank for free. Everybody else, SOL. What a farce !
Walmart won't get into the loan business even if they are allowed to purchase "industrial banks". They have been trying for years...they want to be able to process those debit/credit cards and rip off customers with the "swipe fees" that they will collect (2-4% of total transaction). They don't want the scrutiny or regulations that regular banks are subjected to.
Come on folks! Nobody uses conventional banks for home mortgages anymore! Who do you think got us in the mess we are in now? Conventional banks! And car loans? You still get decent rates from GMAC and FMC or any of the other manufacturers financial arms if you have serviceable credit. I work at Walmart and we have a Woodforest branch in our store. I used them for three years in Houston and now here in Chicago. Great bank and convenient. This is the way of the new world. Better get used to it!
"...and retailers have started to realize that those same consumers are shopping in their stores..."
Might want to put a little more bleach in the mop bucket.
Yes. The way of the future. Walmart got me my heart transplant at 50% off, and on the way out of the store, my grandma died and, lucky for me, they had in store cremation services. I was able to pick up a nice urn in the garden center.
As I recall, Wal Mart did try a few years ago to get into the loan business and VISA Card business but the banking industry screamed and shut that thinking down.
"Next time you need a mortgage or a car loan, try Walmart."
1. Who needs a money losing mortgage anyway? That seems to only be a good deal for the banks these days anyway. No profit in it for the little guy.
2. Who needs a bank to get a car loan? That's quaint. Just get financing from any number of institutions as arranged by the auto dealer at the time of purchase...
One in five has no checking account? How do you spell Welfare? My buddy runs a cab company and says all hell brakes loose when the Welfare checks are released. Half of the riders head to Walmart the other half to the liquor store. He stated they are rude, obnoxious, tipless and demanding. It's the most dissapointing part of his business and the government pays for it. These companies like Walmart are going after US certified funds (Welfare), Walmart will become as the Tennessee Ernie Ford song says. I owe my soul to the company store. Pathetic
BD, Have your "buddy" move to a business neighborhood, and drive only rich people around, I'm sure they're always polite and tip big. I'll bet he still takes the dirty, nasty wellfare recipents money anyway , doesn't he?
More like illegals
With food and fuel prices going up, why not cash it and spend it at the same place.
Maybe a bank at my gas station. Who needs food?