7 Risks You’re Taking by Not Having a Bank Account

The FDIC estimates that 4.5% of U.S. households were “unbanked” as of 2021. It’s a small fraction of the country, but it means that nearly 6,000,000 people live in households with no savings or checking accounts.

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A bank account can be the most valuable. basic tool of personal finance In modern times, it is almost a necessity. So why would you want one less?

Kevin R. Chancellor, CEO of the Financial Advisor, Certified Social Security Claim Strategy and Financial Advisor, stated that “individuals who don’t have a bank account do it for one reason or another.” Black Lab Financial Services. “First, there are people who don’t trust financial institutions or banks in general. Second, some individuals might not be able to pay the fees and charges to keep their bank accounts open. However, having a bank account is not a requirement. pose some real short-term and long-term financial risks.“

You are putting at risk your financial health.

A checking account is the minimum requirement for financial security in today’s digital age.

Robert Davidson, CEO of Financial Experts, stated that those who do not have a bank account are missing out on the many benefits of banking, such as safety, security and access to credit. California Title Loans. “Moreover, it is difficult to track income and expenses each month if there is no bank account. This can lead to financial instability as well planning difficulties for future expenses and goals.

It’s hard to complete the most difficult tasks involving money.

If you forgo a bank account, it will create unnecessary obstacles to your most basic financial functions, such as earning income, saving money, paying bills, and receiving your income.

Trinity Owen (founder and chief financial officer at Trinity Owen) stated, “For instance, many employers require that prospective employees have a banking account in order to receive them.” The Pay at Home Parent. “Without one you might miss out on certain services, incur additional fees, and expose yourself to fraud and identity theft.”

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Borrowing money will be more difficult

It doesn’t just involve the basic requirements of receiving direct deposits or paying bills without sending money orders. All of the major financial milestones, such as buying a house or a car. Run through your bank account.

“Obtaining financing to finance large purchases such as a mortgage, or any other type of loan without having an established account can prove very difficult,” said Chancellor. Lenders won’t have much faith in your ability repay your loan if you don’t have a clear record of your income or spending. An established checking account is required in order to apply for most types of credit.

Even if they aren’t borrowing, those who don’t have a checking account face many obstacles that they might not be able to avoid.

“For example: making an online reservation for lodging, car rentals, or travel, usually will require a debit/credit card on file,” said Chancellor.

Your Money Will Not Be Safe

Bank deposits are insured by the federal government, but your shoebox does not.

According to Chancellor, FDIC-insured banks can protect your account for up to $250,000 Individuals without FDIC-insured accounts are exposed to any cash in their homes or on hand. This includes theft, flood, fire and many other risks.

The World is Leaving You Behind

A tiny fraction of the population could have managed to live comfortably with their money in their beds before 2020 — but COVID-19 forced them to make a swift and permanent switch to digital finance, leaving the rest out in the cold.

Christopher William, CPA, founder of the website, stated, “As technology advances we are moving closer towards a cashless society.” Balanced News Summary. “The pandemic has made this even more difficult, and contact-free services are preferred. Therefore, it is becoming more risky to not have a bank account.

Financial transactions could be more expensive

The unbanked are forced to enter the often-shady, often-expensive world of alternative financial services. These services are often designed for users to fall into a cycle of default.

Jennifer White, senior director for banking and payments intelligence at ICI Bank, stated that the biggest risk in not having a bank card is that it can end up costing you more. J.D. Power. “The alternative options created to serve the unbanked have been known for charging predatory fees or hiding their fees for banking-like service. Many fees are high for cash checks and money transfers without a bank account.

Check cashing can be expensive, but that’s just the beginning. Borrowing without a bank account is the real pain.

White said that payday loans could be a good option for short-term funding, but they can come at a higher interest rate. Even services such as buy now, pay later (BNPL), may lead to higher prices.

Receive Government Money, but you could miss it or be delayed

If you don’t have a bank account, it could lead to delays in receiving payments from the government.

Daniel Colston, certified financial planner and CEO of, stated that many government benefits can now be electronically accessed. Upward Financial Planning. “Without an account you might have to rely upon prepaid cards or cash payments which can be more risky and less convenient.

It’s not only standard benefits like Social Security, disability or Social Security. The unbanked will be last in line whenever the government gives money back for tax refunds and during times of crisis.

White stated that government payments such as stimulus checks can also be more easily and quicker accessible.

Nearly anyone can get a bank account for free today

According to Chancellor, fees and other expenses are the main reason that unbanked people go without accounts. However, the traditional financial barriers that prevented them from banking have been mostly removed.

White stated that at one time many banks charged minimum balance fees. This kept some customers away because it was expensive to open an account. There are many fee-free options available to customers today that allow them access to banking services such as check cashing or money transfers and personal loans.

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This article first appeared on GOBankingRates.com: 7 Risks You’re Taking by Not Having a Bank Account