Wisconsin Blacks Don’t Have Bank Accounts
The largest survey ever of how many families in the U.S. have bank accounts revealed both good news and bad news for Wisconsin.
The good news: The percentage of households without a bank account is smaller in Wisconsin than nationally, 4.3% vs. 7.7%.
The bad news: The state fares worse than the U.S. average when it comes to bank accounts for blacks and Hispanics. The survey found that 30.4% of African-American and 32.6% of Hispanic households in the Wisconsin were “unbanked” – meaning no one in the family had a checking or savings account. That compares with 21.7% for blacks nationally and 19.3% for Hispanics.
The upshot, according to the FDIC, which released the survey findings Wednesday, is that banks and credit unions need to develop more low-cost ways to conduct transactions such as check cashing, educate more people about the value and safety of savings accounts, and offer reasonably priced alternatives for small-dollar loans.
“I think our challenge is to make sure banks have the appropriate range of products and services to meet the needs of all people, including low-income communities, and have the right fee mix that is cost effective,” Sheila Bair, chairman of the FDIC, said during a conference call Wednesday.
At 4.3%, the amount of Wisconsin households without an account at a bank or credit union was tied with Alaska for 11th-lowest.
The survey asked households without bank accounts why they don’t have any. The No. 1 reason was that they didn’t have enough money to need an account. Among other top reasons: They didn’t want or see the value of an account, the service charges were too high, they did not write enough checks, the minimum balance requirements were too high, they’ve bounced too many checks or did not trust banks.
The survey also looked at “underbanked” households – those that have a checking or savings account but still rely on alternative financial service providers, such as payday lenders. In Wisconsin, 16% overall were found to be underbanked, compared with 17.9% nationally. Among Wisconsin blacks and Hispanics, 39.4% and 15.6% were underbanked, respectively, compared with 31.6% for blacks and 24% for Hispanics in the U.S.
“What it shows is we still have a lot of work to do, but we’re up for the task,” said Deloris Sims, chairman and chief executive of Legacy Bank, which operates in Milwaukee’s central city.
Sims said in some cases, bringing people into the mainstream financial system means overcoming years of tradition.
“I think some generations of people have definitely been raised on check cashing outlets versus banks,” Sims said. “That’s the way they are raised, and that’s what they do. That’s how they take care of their business. They could do things differently if they were educated.”
Legacy and many other banks here have outreach efforts to show people the value of using checking and savings accounts.
Wisconsin’s biggest bank, M&I Bank, has two full-time staff members whose job is to conduct financial education and find ways to attract consumers into the banking system, said Ammar Askari, M&I community education administrator. He said immigrants, particularly Hispanics, often are reluctant to put their confidence in the banking system and prefer to deal in cash.
“They come in with a great deal of mistrust of financial institutions based on their experience back home,” Askari said.
Some consumers have had bad experiences with American banks, such as penalties for bounced checks, and find it easier to operate through other types of financial services providers, he said.
“I’m sure you could say that there’s always more that could be done, but I think we do quite a bit in terms of educating people about the benefits of bank accounts and traditional accounts,” said Rose Oswald Poels, senior vice president of the Wisconsin Bankers Association.
