A reassuring legend is printed on the banknotes of the United States: “This note is legal tender for all debts, public and private”. I have always been happy to know that Uncle Sam is there for me; got my back, so to speak.
But for 14.1 million American adults, that claim is a lie as bills are pushed aside by bank cards, credit cards, and online payment systems like PayPal. The stranded are the unbanked, the unplasticized.
The unbanked are not axiomatically the homeless, undocumented immigrants or those who have fallen through the cracks. They are also people who have jobs who pay their taxes, many of whom lead exemplary lives but do not have a bank account.
Maybe it’s because they don’t trust banks or – and this is a big factor for the unbanked working poor – they think having a bank account is too expensive. They have been charged disproportionately for rejecting a check, late payments, or any other creative means that banks use to increase their income, such as high fees for using an ATM.
However, if you choose to keep your money under the mattress or in the breadbox, you are choosing to be the financial equivalent of an undocumented migrant. Essentially, you are immobilized.
All of this occurred to me as I checked in online for a recent United Airlines flight. I learned that I had to check in a payment method for boxed meals and snacks before boarding because I would not be able to use credit cards during the flight. United maintains, “We are working to make your travel more enjoyable while maintaining a more secure, contactless travel experience.” In the days of COVID-19, that’s fine with me. But the corollary is that they don’t take cash – no credit card, no snack.
Most airport restaurants will order by computer – again, no credit card, no food. I went to one of those wired restaurants in Newark Liberty International and wondered about the unbanked: how would they feed a child if they didn’t know money wasn’t being accepted?
For the unbanked, traveling is almost impossible. First of all, you will need to go to the airport and buy your ticket in cash. But would they take it? Airline offices are no longer scattered and most travel agencies are now virtual. To get to and from the airport, you may need to take an expensive taxi – if there is one, as you won’t be traveling with Uber or Lyft.
Want to stay in a hotel when you arrive at your destination? You will not have a reservation because you cannot make one without a credit card. Then you have to implore the hotel to let you stay.
Once in San Francisco, I had to pay cash for a hotel room because I had lost my wallet. They gave me a room (I was in their guest file because I had stayed there on a previous trip); took a cash deposit for the room, which my office had sent via Western Union; and asked me not to charge for any items, not a drink, a meal or a phone call.
Welcome to the world of plastics, like credit card addiction. Who would have thought that your freedom was tied to a little plastic card?
The road from unbanked to banked is strewn with obstacles and it takes years to build up credit for, say, a new car or a mortgage. The person who doesn’t have a bank account doesn’t have a credit history – and that means they have little formal existence.
There are hidden costs to being unbanked. Your paycheck will need to be cashed somewhere and check cashing services, like payday lenders, will charge a fee of up to 3% of the check. In addition, the unbanked fall victim to dubious operators, running illegal banking services and other scams.
The burden of not being banked is unlimited.