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States as well as Metro Areas With the Most Unbanked Households

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States as well as Metro Areas With the Most Unbanked Households

by Laura McMullen Assistant Assigning Editor Personal finance, financial information Laura McMullen assigns and edits the financial news content. She was previously a senior writer for NerdWallet and was responsible for budgeting, saving and making money; she was also a contributor to “Millennial Financial” column of The Associated Press. Prior to joining NerdWallet at the end of 2015 Laura worked for U.S. News & World Report, where she created and edited articles on careers, wellness and education and also contributed to the company’s ranking projects. Before joining U.S. News & World Report, Laura interned at Vice Media and studied journalism as well as the history of Arabic in the Ohio University. Ohio University. Laura is a resident of Washington, D.C.

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The majority or all of the items featured on this page come from our partners who pay us. This impacts the types of products we review as well as the place and way the product appears on the page. But, it doesn’t affect our assessments. Our opinions are our own. Here’s a list and .

The benefits of your bank aren’t limited to free coffee and candy -they offer services you might consider to be a given, such as cashing your checks at no cost and loans that offer reasonable rates of interest. However, for the more than 9.5 million households that are not banked across the U.S., these services come with a hefty price and one that NerdWallet discovered can add up to hundreds of dollars per year.

In the U.S., 7.7% of households didn’t have any members who had a bank account in the latest FDIC Nationwide Survey of Unbanked and Underbanked Households, which is the most current set of data available. That was down from the 2011 version of the Federal Deposit Insurance Corp.’s biannual survey, and the number dropped to 7% in 2015, according to an early preview of the new edition, which will be published in October.

Benefits not used, additional fees

While fewer families are avoiding banks, the ones who are not taking advantage of the opportunity to save up for emergencies, and secured credit cards that aid in building credit. They don’t benefit from the entire array of security against fraud that federally insured banks as well as credit unions provide, and they can’t access the online and mobile banking options which can save the time as well as money. (Read NerdWallet’s national coverage on the to learn more about the options available to unbanked consumers, including .)

Households that don’t have an account with a bank also have to pay loads of fees to costly alternative financial service providers. NerdWallet calculated the costs of money order, check cashing, and pre-paid debit cards. Unbanked households that use the prepaid debit card which allows direct deposit pay an average annual amount for $196.50 in fees. On the other hand, those without banks who utilize a prepaid debit card with no direct deposit have an annual average of $488.89 in charges. (See our full methodology for more information.)

Unbanked households are reported by metro and state

We examined the $196.50 as well as the $488.89 figures as percentages of each state’s average 2013 income for households that don’t have accounts with banks that are based on FDIC data. Look at this map to see the states where unbanked households are the most affected with fees, using both the higher ($488.89) as well as the less ($196.50) figures. You can also see what states are home to the largest number of households without a bank account.

The table below shows the proportion of households that are not banked in 22 metropolitan areas and in all states, plus Washington, D.C. We estimated the cost of not having accounts with banks in percentages of the household income of households that are not banked within the metro area, as determined by the FDIC. We excluded three major metro areas for which some data were unavailable: San Diego-Carlsbad-San Marcos, California; Sacramento-Arden-Arcade-Roseville, California; and San Antonio, Texas.

Metro area has a large number of households that are unbanked.

UNBANKED HOMEHOLDS BY STATE

Rank (most to least unbanked)

State

Percentage of all households that are not banked

Average unbanked household income

Total unbanked costs of all household households (lower estimate)

Total unbanked expenses for all families (higher estimate)

Costs unbanked average as a percent of income (using higher estimate)

Mississippi

14.5%

$15,394.41

$31.08 million

$79.82 million

3.18%

Louisiana

13.9%

$20,104.15

$47.26 million

$121.37 million

2.43%

Arizona

12.8%

$20,300.92

$61.95 million

$159.07 million

2.41%

Arkansas

12.3%

$15,653.75

$29.08 million

$74.68 million

3.12%

District of Columbia

11.8%

$14,588.29

$7.46 million

$19.15 million

3.35%

West Virginia

11.0%

$18,592.82

$16.56 million

$42.54 million

2.63%

New Mexico

10.9%

$18,934.67

$17.78 million

$45.67 million

2.58%

Georgia

10.9%

$18,957.70

$81.64 million

$209.64 million

2.58%

Oklahoma

10.9%

$19,373.49

$32.56 million

$83.61 million

2.52%

South Carolina

10.5%

$19,724.50

$38.88 million

$99.84 million

2.48%

Texas

10.4%

$20,621.80

$191.63 million

$492.07 million

2.37%

Kentucky

9.7%

$15,417.32

$34.05 million

$87.45 million

3.17%

Tennessee

9.7%

$17,204.81

$48.51 million

$124.58 million

2.84%

Alabama

9.2%

$18,787.70

$36.03 million

$92.52 million

2.60%

Missouri

8.9%

$20,058.95

$42.11 million

$108.12 million

2.44%

New York

8.5%

$16,833.40

$125.19 million

$321.47 million

2.90%

North Carolina

8.4%

$17,177.65

$61.46 million

$157.82 million

2.85%

New Jersey

8.2%

$21,298.78

$51.25 million

$131.61 million

2.30%

California

8.0%

$22,211.31

$206.18 million

$529.45 million

2.20%

Nevada

7.9%

$19,047.68

$17.06 million

$43.80 million

2.57%

Illinois

7.4%

$21,036.78

$71.47 million

$183.53 million

2.32%

Ohio

7.2%

$18,777.16

$65.61 million

$168.47 million

2.60%

Indiana

7.2%

$22,675.18

$36.28 million

$93.17 million

2.16%

Montana

6.6%

$11,963.24

$5.35 million

$13.74 million

4.09%

Virginia

6.5%

$19,340.75

$39.67 million

$101.88 million

2.53%

Colorado

6.4%

$22,159.12

$25.84 million

$66.36 million

2.21%

Rhode Island

6.2%

$18,543.22

$5.12 million

$13.15 million

2.64%

Florida

6.2%

$19,376.05

$95.70 million

$245.73 million

2.52%

Delaware

6.1%

$22,921.16

$4.33 million

$11.12 million

2.13%

Kansas

6.0%

$21,820.97

$13.49 million

$34.64 million

2.24%

Massachusetts

5.8%

$22,086.69

$29.38 million

$75.45 million

2.21%

Nebraska

5.7%

$15,622.98

$8.47 million

$21.76 million

3.13%

Michigan

5.7%

$19,127.41

$42.44 million

$108.99 million

2.56%

Connecticut

5.6%

$21,036.57

$15.37 million

$39.48 million

2.32%

Wyoming

5.6%

$24,067.11

$2.65 million

$6.82 million

2.03%

Idaho

5.4%

$17,444.44

$6.39 million

$16.42 million

2.80%

Pennsylvania

5.2%

$17,820.47

$52.14 million

$133.90 million

2.74%

Wisconsin

4.8%

$16,495.70

$21.75 million

$55.85 million

2.96%

Maryland

4.8%

$24,470.06

$20.81 million

$53.43 million

2.00%

Oregon

4.5%

$16,345.12

$13.62 million

$34.98 million

2.99%

Iowa

4.5%

$18,571.62

$10.83 million

$27.81 million

2.63%

South Dakota

4.2%

$16,040.68

$2.67 million

$6.86 million

3.05%

Washington

4.1%

$17,048.35

$21.07 million

$54.10 million

2.87%

Hawaii

3.8%

$21,096.90

$3.41 million

$8.77 million

2.32%

Minnesota

3.6%

$16,228.27

$14.92 million

$38.31 million

3.01%

Utah

3.3%

$21,617.24

$6.11 million

$15.68 million

2.26%

Vermont

3.1%

$22,553.77

$1.59 million

$4.08 million

2.17%

New Hampshire

2.9%

$26,653.71

$3.00 million

$7.71 million

1.83%

North Dakota

2.8%

$22,645.30

$1.58 million

$4.06 million

2.16%

Maine

2.4%

$14,906.68

$2.57 million

$6.59 million

3.28%

Alaska

1.9%

$21,299.66

$1,002,022.57

$2,573,028.07

2.30%

The most important lessons to take away

1. The proportion of households that are not banked is significantly higher among low-income households: Nationally, 7.7% of households did not have a bank account in 2013, however, that rate was noticeably higher for households with low incomes. About twenty percent of the households that had incomes of less than $30k were not banked, while 24% of them were unbanked which means they had more than one saving account account or but had utilized at least one other financial service in the past year. These kinds of services include cashing checks or money orders, as well as payday loans. More than a third (35.6 percent) of unbanked households surveyed in the FDIC report stated that the primary reason they don’t have an account is that they don’t have enough money to fund an account, or to maintain the minimum balance. (Note that many don’t require minimal balances.) Other reasons that are common include distaste or distrust for banks and high or unpredictable account fees.

The correlation of the national population between bank-independent and low-income households can be seen at the state level. Seven of the 10 states that have the highest proportions of unbanked residents are among the 10 states that have low median incomes for households, according to the 2013 U.S. Census American Community Survey. In fact, excepting Washington, D.C., the nine states with the highest percentage of unbanked households had incomes for households below the median of the 2013 U.S. median of $52,250.

2. The cost of not having a bank account have the greatest impact on households with lower incomes households: The income of households that don’t have accounts with banks is especially low. The average income after tax of unbanked households in the U.S. was $17,359, and was lowest in Montana at $11,963.

Be aware that households without bank accounts that make use of a prepaid debit cards with no direct deposit have to have to pay the equivalent of $488.89 in fees per year. In Montana, that would consume up to 4 percent of the average unbanked household’s income. For context, the average U.S. household spent about 3.5 percent of its income after tax on fuel as well as motor oils in the year 2015 according to the U.S. Bureau of Labor Statistics.

For Washington, D.C., the disparity in earnings between banked and unbanked households is vast. The average income in 2013 for households with a bank account fully in D.C. was $55,032, but that was only $14,588 for those without an account with a bank. This figure isn’t going to be much more than a few dollars in a city where low-income housing opportunities are diminishing. According to a D.C. Fiscal Policy report in 2013, there were roughly half the number of Washington apartment rentals for less than $800 per month as they had in 2002. The report states that “subsidized housing is currently the only source of inexpensive housing.”

3. Unbanked local demographics reflect national trends: According to the FDIC 1/5th of households with black names (20.5%) across the U.S. in 2013 were unbanked, followed by Hispanic (17.9%) and American Indian/Alaskan households (16.9 percent). Just 2.2 percent of Asian households were not banked, which was a lower concentration than for white (3.6 percent) and Pacific Islander/Hawaiian (6.1 percentage) households.

Many of the places with the highest percentage of households that are not banked mirror these national demographics. In No. 12, Tennessee as well as No. 2 Louisiana, the state’s largest city is home to a large percentage of black residents and the largest cities are Memphis at 63 percent and New Orleans at 59.8%. Phoenix is the top city on our list of metros that are not banked is home to a substantial Hispanic community as does Albuquerque which is the largest city located in New Mexico, which tied with the seventh largest state. Two states that have the highest proportions of people who are not banked, New Mexico and Oklahoma are home to American Indian populations nearly 10 times the size of the U.S. as a whole.

4. Access to only in-person and online banking can be a hindrance: It’s hard to open a bank account when there aren’t any branches near where you live. Nearly half of the ZIP code in the middle of South region are “bank deserts” that is, they’ve only one or no bank branches, according to the MS-based Hope Policy Institute, which examines the financial inclusion. The analysis of the institute shows that the mid-South comprises Mississippi, Louisiana and Arkansas and has some of the highest proportions of households that are not banked. This region includes the western region of Tennessee where is the home of Memphis which is where nearly one-fifth (19.5%) of households do not have an account with a bank.

Brick-and-mortar locations are more crucial for those who are unable to connect to financial institutions online. Some Memphis residents face hurdles to both methods. According to the U.S. Census Bureau’s 2013 American Community Survey, 27.7% of Memphis households were without access to the internet, compared with 21.4 percent across the country. Access to internet is a major issue across New Orleans, too, at 27.4 percent.

Sreekar Jasthi is a data analyst at NerdWallet the personal finance site. Email: . Laura McMullen is a staff writer at NerdWallet. Email: . Twitter: .

Methodology

Concentrations of income and unbanked households

To calculate the median income of households that are not banked nationwide and in each state we used information from the . To identify which metro areas to analyze we first selected those 25 from the FDIC report that contained the largest number of households. We omitted San Diego-Carlsbad-San Marcos, California; Sacramento-Arden-Arcade-Roseville, California; and San Antonio, Texas, because of insufficient income data.

Figures for the percentage of households that are not banked in each state and metro area are also from FDIC’s report. FDIC report.

Charges that are incurred when you’re not a banker

We found a interval from $196.50 to $488.89 in fees for the typical household that is not banked, by adding in the fees associated with cash checking or money orders, as well as pre-paid debit cards. The cost of these fees is contingent on whether the households’ debit cards that are prepaid allow direct deposit.

To calculate the cost of check cashing for non-banked households with debit cards prepaid without direct deposit or for those using only cash we assumed two pay checks that were cashed each month, and a fee of 1% of the check’s value. For households that use debit cards prepaid with direct deposit option, we accounted for $0 for check cashing. For both households we assumed one cash order sent per month with an average fee of $1.40.

To determine the average of check cashing and money-order fees, we analyzed the FDIC’s statistics on how often alternative financing services used by each kind of household (banked or not) Then we added the less frequent use by households that are banked to the cost average.

To determine the average annual cost of debit cards that are prepaid we looked at 69 cards, based on the major issuers, their high-traffic searches volume as well as Pew Charitable Trust’s the cards listed on ‘s and ‘s websites. For cards with different plans We counted every plan as a distinct card.

The study includes the annual costs of the prepaid debit card that comes with and without direct deposit for payroll. The median monthly fee used was $4.98 and the median out-of-network ATM fee used was $2.50. We paid the maximum fee for cash loading of $4.95.

Without directly depositing, we assumed twelve monthly fees and four ATM fees per month and the two fees for cash loading per month. Signature-based and PIN-based purchase transaction fees usually don’t apply to cards that have monthly fees, so we excluded them.

Upcoming FDIC survey

A preview of the 2015. FDIC National Survey of the Unbanked and Underbanked Households, set to be released in its entirety on Oct. 20th The survey revealed that the number of households without a bank account has fallen to 7.7%, which is around 8.6 million households. NerdWallet’s analysis is based on the most up-to-date set of data available.

Author bios: Laura McMullen writes about managing money for NerdWallet. Her work has appeared in The Associated Press, The New York Times, The Washington Post, and other outlets.

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19 Neobanks and What They Offer Advertiser disclosure We consider you to be our first priority. Every day. We believe everyone should be able to make sound financial decisions with confidence. While our website doesn’t include every business or financial product available on the market We’re pleased of the advice we offer, the information we provide and the tools we develop are independent, objective easy to use and completely free. How do we earn money? Our partners pay us. This can influence the products we write about (and the way they appear on the website) however it in no way affects our suggestions or recommendations that are based on hundreds of hours of research. Our partners cannot be paid to ensure positive ratings of their goods or services. . 19 Neobanks and the Benefits They Provide Neobanks stand out by focusing on specific communities, offering various perks and more. By Spencer Tierney Senior Writer | Certificates of deposit bank accounts, ethical banking, deposits Spencer Tierney is a consumer banking writer for NerdWallet. He has covered the personal financial sector since, with a particular focus on certificates of deposit and other banking-related subjects. His work has been featured by The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among others. He’s based at Berkeley, California. Sep 23rd, 2021 Edited by Yuliya Goldshteyn Assistant Assigning Editor — Banking Yuliya Goldshteyn is a banking editor at NerdWallet. She was previously editor, writer and research analyst in various industries that range from health care and market research. She received a bachelor’s level degree in history from University of California, Berkeley. University of California, Berkeley as well as a master’s degree in social sciences from the University of Chicago. You can reach her at

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The savings account comes with a couple requirements to earn an interest rate of 5.00 percent APY for the first $5,000 of savings, which includes the requirement of a minimum of $1,000 in monthly direct deposits, and maintaining an open checking and savings balance at the end of the month. Otherwise you earn 3.00 percent APR. Read Varo review To the top widest range of account types SoFi SoFi is abbreviation to mean “Social Finance” was founded as an student loan refinance business, but has recently obtained the charter of a bank owned by SoFi. SoFi checking and savings is a account that allows the money to spend and save. It has no account fees for overdrafts, ATM usage, or monthly maintenance (subject to changing at any time). There are perks like earning interest, establishing subaccounts to save, and, for customers with qualified direct deposits, free overdraft coverage that can be up to $50. SoFi also provides a variety of loans, automatic and active investing and trading in cryptocurrency credit cards, as well as retirement accounts. Return to top One is owned by Walmart, One’s banking account comes with a low-cost overdraft plan, a custom savings and budgeting options. Customers can choose to arrange their funds into subaccounts called Pockets. The pockets that are dedicated to saving offer rates of 1% of up to $5,500 for every customer, and 1% on up to $25,000 in the case of customers with direct deposit. One provides fee-free overdraft coverage as high as $200 for customers with direct deposits of at least $500 per month. That’s cheaper than big banks’ overdraft fees, which can be around 35 cents per transfer. Read reviews on One:Return to topMore information about credit building GO2bank (and GoBank) Green Dot Corporation has offered alternatives to banking since. Beginning with debit cards for prepaid, it expanded into its first digital bank, GoBank In 2013, before launching its second brand of bank, GO2bank, in 2021. The majority of Green Dot deposit accounts are federally insured by Green Dot Bank. Contrary to many neobanks which require online registration, you can pick up GoBank or GO2bank credit cards from retailers such as Walmart and activate them online to use with a mobile app. In comparison to the other brands, GO2bank is by far the more preferred choice, with a lower monthly cost and more benefits however not as many as other neobanks such as Chime and Varo. GoBank’s $9 per month fee is waived by $500 direct deposits. the $5 fee for GO2bank’s monthly service is waived when you deposit direct with no minimum amount. Alongside the bank account, GO2bank offers a secured credit card to increase credit score and an account for savings that earns an APY of 1% for the amount of up to $5, 000. However, GoBank doesn’t offer a credit card and its savings vault doesn’t earn interest. Read GoBank review: Learn more about GO2bank: Return to top Sesame Cash The credit company Credit Sesame launched a free digital banking account in March 2020 . The account concentrates on helping those who live paycheck to paycheck. The account’s features include direct-deposited paychecks up to two days early as well as mobile and cash deposits and a limited cash-back program for debit cards and free access to a national ATM network. Through the account, users get access to Credit Sesame’s free monitoring of credit scores and regular updates to credit scores. • Compare the top to the back MoCaFi MoCaFi, or Mobility Capital Finance is Black-owned digital platform that was launched in 2016 and offers free checking for the majority of communities that are unbanked or underbanked, with a focus on closing the racial wealth gap. The platform offers a bill-pay feature that allows users to report rent payments to major credit bureaus to create credit history. It is a unique perk. MoCaFi collaborates with third-party partners to give cash-free deposits at a variety of merchants and also free mobile check depositing with quick cash out. Back to the top Dave Dave started in 2017 as a paycheck advance company and later expanded to provide a full-fledged checking account. By the middle of 2021, it had around 1 million clients. You can get a small advance on your next paycheck without any interest or credit check. Customers with at least $1000 in direct deposits per month are able to build credit history by making rent payments. Dave also provides budgeting that includes upcoming expenses and the option to search for side jobs in its mobile app. There are no charges to use overdrafts or ATMs within the nationwide MoneyPass network and no minimum balance requirements. Read Dave review Return to top cash-back rewards Current Current, founded in 2015, offers no-cost and premium options for checking with cash-back at certain merchants, two-day direct deposit, and quick refunds on gas station debit hold on cards. The latter two perks are only available on premium accounts, which have an annual fee of $5. Premium accounts that make direct deposit can also have up to $100 in overdrafts protected at no cost. Read Current review: Back to top Upgrade The personal loan company Upgrade, started in 2017, introduced a free checking account in 2021 with cash-back benefits that are greater than Current’s. The main benefits offered by Upgrade to their customers with a checking account are the cash back of 2% for everyday purchases, like at drugstores and restaurants, and the possibility of 20% rate discounts on personal loans. Customers are also able to view their credit scores no cost and a summary of their credit reports by using their Credit Health service. Check out the reviews of Upgrade:Refresh Bella Bella’s bank approach is, in the words of its website, “built on love.” It’s an account reward program for checking accounts which offers a variable percent of cash back in the range of 5% to 200 percent, on randomly chosen purchases. The program was introduced in 2020. Bella doesn’t charge monthly, overdraft or ATM fees. Currently, Bella also covers fees that are charged by non-network ATM operators. There is also a no-fee savings account, but it offers low interest rates and an optional “karma account” which can be used to pay for other customers’ small purchases or as a beneficiary of a karma account’s generosity. Check out our list of the Back to top Cheese Started in March 2021, Cheese tailors its digital banking platform to the immigrant and Asian American communities with up 10% cashback for 10,000 businesses, which includes Asian-owned restaurants and businesses. Support is provided in English as well as Chinese, with more languages soon. Accounts earn interest and don’t have monthly charges or ATM fees within the national MoneyPass ATM network. >> Learn more about Back to top Investor-friendly Acorns Although the microinvesting application Acorns main product is its automated investing for investors who don’t have hands The company expanded its banking offerings in the year 2018 with Acorns Checking. It comes with the debit card as well as a limited rewards program. It is offered in a bundle that includes a taxable investment account and an individual retirement account at a cost of $3 per month (or $5 for a family version). Customers are able to opt into an “round-up” feature where each purchase is rounded up by a certain amount and that change is then invested. The rewards program offers an amount or a portion back from purchases at over 300 companies, and that can also be invested. Read Acorns review: Back to top Aspiration Aspiration is an internet-based brokerage firm with a cash management account, called Spend & Save, that works like an hybrid savings and checking account. There are two different versions of the account. The basic Spend & Save account has up to 3.00 percent APR on savings, as high as 5% cashback and an optional monthly fee that customers pay the amount they believe is fair from the point of zero up to. The higher-end Aspiration Plus plan comes with an annual fee of almost $72 and with up to 10 percent cashback as well as up to 5.00% APY. There are two accounts available also, which allows you to invest in businesses that are sustainability and social cause. As a certified B Corp company, Aspiration is committed to being an environmentally responsible and socially conscious business that offers its customers personalized sustainability scores depending on the companies they invest in. Read Aspiration review: Aspiration Spend and Save Accounts are cash management account that are available through Aspiration Financial, LLC, registered broker-dealer, member of FINRA/SIPC. It is also a subsidiary that is part of Aspiration Partners, Inc. (“Aspiration”). Aspiration is not a financial institution.” The Aspiration Save Account’s 5.00 percent Annual Percentage Yield (“APY”) that can be up to 83x the average national interest rate is subject to change, subject to change, and is only available to customers who are members of Aspiration Plus once the conditions are met. Customers who are not part of Aspiration Plus get 3.00% APY after conditions are met. Back to top Albert Albert started in 2016 as a mobile app for managing money and launched a personalized banking service named Albert Cash in August 2021. The company has more than 6 million customers. Albert Cash is a banking account that earns cash back and includes the following benefits that include no-interest cash advances of up to $250, integrated budgeting and savings tools, and annual savings bonuses that can reach 0.10 percent. For access to Albert’s investing features, get the savings rate to 0.25 percent, and take advantage of the personalized support for customers, called Genius There is an annual minimum fee of $4. You must have an account with a bank outside of the United Kingdom for an account at Albert. Return to top Traveler-friendly Revolut was launched in the year 2015 the UK-based Revolut offers appealing features to international travelers looking for affordable exchange rates and a debit card that can use more than 150 currencies. Customers can make international transfers with other Revolut customers, make withdrawals of up to $300 monthly from ATMs at no cost and get the interest from savings. All this is included with the account that is free. To get more benefits, such as overseas medical insurance, Revolut offers two accounts that charge monthly fees of $17 and $10. Read Revolut reviews: Back to top Wise Revolut U.K.-based money transfer business Wise was previously called TransferWise established a multicurrency account that rolled into U.S. customers in 2017. While there’s a $9 initial cost on the credit card Wise doesn’t charge monthly charges and also converts currencies at an affordable exchange rate for a minimal upfront fee. For converting a balance of $1,000 U.S. dollars to euros as an example, will cost approximately $4.20 which is 0.42%, which is cheaper than banks’ foreign transaction charges of 1% to 3%. The account can contain multiple balances, holding as many as 54 different currencies at a time and the conversion process could take only seconds. Check out Wise review: Back to top Freelancer-friendly Oxygen Launched in early 2020 the Oxygen digital banking account aims to help freelancers and self-employed employees control their money flow. Oxygen does not cost monthly fees, ACH or overdraft fees, but there are four pricing tiers that can be used for the account. They range from zero to $200 per year. All levels offer travel benefitslike lost luggage and hotel theft protection. higher levels come with more benefits such as more savings rates, higher cash back and numbers of virtual cards. A unique perk is the ability to make use of the Oxygen application to incorporate or legally become a company after which you can then . Check out the Oxygen review: Return to top Lili launched in the year 2019. Lili is a free mobile bank account that was designed with freelancers and independent contractors in mind. With Lili you can classify your expenses by simply tapping left to indicate “life,” or personal, and right to indicate “work,” or business. Lili offers tools that help freelancers save for taxes, and also an emergency savings account. In addition, if you use Lili’s account to deposit the earnings you earn from websites and payment apps you will receive your funds for up to 2 days prior. This is a common feature for neobanks in general. Read Lili review The top Neobanks soon on your watch for the emergence of these four Neobanks in the near future. Daylight: Formerly called Be Money, Daylight plans to launch a mobile bank account specifically targeting members of the LGBT+ community with features like access to financial advisors and accounts with a person’s chosen name, rather than their legal name. Greenwood is a Black-owned digital banking firm already has half a million customers waiting to be added to its list of customers for savings and spending accounts which focus on reinvesting money in Black or Latinx communities. (See our list of upcoming and ongoing .) First Boulevard is a Black-owned banking platform focuses on low-cost banking that offers cash back to Black-owned companies, and brief financial education videos. Its aim is to create the wealth of generations to Black Americans. Purple: Purple plans to provide mobile banking specifically for people with disabilities, including an account for checking and an account that is tax-advantaged, a savings account known as ABLE accounts. These accounts allow those with disabilities save money without the loss of any government aid. There will also be a debit card that sends a portion of Purple’s revenue towards the Special Olympics. Return to top From credit monitoring tools to travel benefits Modern checking accounts provide more features than their predecessors did. Before signing up for one, verify whether the fintech firm is a bank or partners with a bank. Also, consider which features best suit your needs in the financial realm. Author bio Spencer Tierney is an expert in the field of certificates of deposit at NerdWallet. The work of Spencer Tierney has been highlighted by USA Today and the Los Angeles Times. On a similar note… Get an alternative savings account NerdWallet’s recommendations for the top high-yielding online savings accounts. Dive even deeper in Banking Make smarter money decisions right to your inbox Sign up and we’ll send you Nerdy posts about the money topics which matter to you the most along with other ways to help you get more from your savings.

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States as well as Metro Areas With the Most Unbanked Households

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States as well as Metro Areas With the Most Unbanked Households

by Laura McMullen Assistant Assigning Editor Personal finance, financial information Laura McMullen assigns and edits the financial news content. She was previously a senior writer for NerdWallet and was responsible for the process of saving, budgeting and making money; she has also written for the “Millennial Money” column for The Associated Press. Prior to joining NerdWallet as of the year 2015 Laura had worked at U.S. News & World Report in which she created and edited information on careers, wellness and education and also worked on the rankings of the company. Before working at U.S. News & World Report, Laura interned at Vice Media and studied journalism, history and Arabic at Ohio University. Laura is a resident of Washington, D.C.

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The perks at the local bank extend beyond complimentary coffee and chocolate- they include things you might take for granted for example, free check cashing and loans with reasonable interest rates. But for the greater than 9.5 million households that are not banked in the U.S., these services have a steep cost which NerdWallet discovered can add up to hundreds of dollars per year.

The U.S., 7.7% of households did not have a member with a bank account, as per the 2013 FDIC Nationwide Survey of Bankrupt and Underbanked Households, which is the most current set of information available. This was lower than the 2011 edition of the Federal Deposit Insurance Corp.’s biannual survey, and the figure fell to 7% in 2015, according to an overview of the most recent editionthat will be released in October.

Missed benefits, added fees

Although less families are turning away from financial institutions, those who do are missing out on , in which they can save up for emergencies, and secured credit cards which can assist in building credit. They don’t benefit from the full range of security against fraud that federally insured banks as well as credit unions have as well as access to online and mobile banking tools that can save them the time as well as money. (Read NerdWallet’s national coverage on the topic to find out more about the options available to unbanked consumers, like .)

Households that don’t have accounts with banks also pay loads of fees to costly alternative financial service providers. NerdWallet has compiled the cost of money orders, check cashing and prepaid debit cards. The households with no bank accounts that have the prepaid debit card which permits direct deposit pay an annual average for $196.50 in fees. On the other hand, those without banks who make use of a prepaid debit cards without direct deposit pay an average annual amount of $488.89 in charges. (See our complete methodology for more information.)

Unbanked households by state and metro area

We examined the $196.50 in addition to the $488.89 figures as percentages of each state’s 2013 median income for households who don’t have accounts with banks and according to FDIC data. Check out on the below map, to find the states where unbanked households are the most affected by the cost of fees using both the more expensive ($488.89) as well as the less ($196.50) estimations. You can also find out what states are home to the largest number of households that do not have a bank account.

The table below shows the percentage of households without a bank account in the 22 metro areas and in all states plus Washington, D.C. We calculated costs of having a bank account in percentages of the average unbanked household income in the area as determined by the FDIC. We excluded three major metro areas for which some data were unavailable: San Diego-Carlsbad-San Marcos, California; Sacramento-Arden-Arcade-Roseville, California; and San Antonio, Texas.

In metro areas, households are not banked.

UNBANKED HOUSEHOLDS BY state

Rank (most to least)

State

The percentage of households that are not banked

Average unbanked household income

Total unbanked expenses of all household households (lower estimate)

Total unbanked costs across all households (higher estimate)

Average unbanked costs as percentage of income (using higher estimate)

Mississippi

14.5%

$15,394.41

$31.08 million

$79.82 million

3.18%

Louisiana

13.9%

$20,104.15

$47.26 million

$121.37 million

2.43%

Arizona

12.8%

$20,300.92

$61.95 million

$159.07 million

2.41%

Arkansas

12.3%

$15,653.75

$29.08 million

$74.68 million

3.12%

District of Columbia

11.8%

$14,588.29

$7.46 million

$19.15 million

3.35%

West Virginia

11.0%

$18,592.82

$16.56 million

$42.54 million

2.63%

New Mexico

10.9%

$18,934.67

$17.78 million

$45.67 million

2.58%

Georgia

10.9%

$18,957.70

$81.64 million

$209.64 million

2.58%

Oklahoma

10.9%

$19,373.49

$32.56 million

$83.61 million

2.52%

South Carolina

10.5%

$19,724.50

$38.88 million

$99.84 million

2.48%

Texas

10.4%

$20,621.80

$191.63 million

$492.07 million

2.37%

Kentucky

9.7%

$15,417.32

$34.05 million

$87.45 million

3.17%

Tennessee

9.7%

$17,204.81

$48.51 million

$124.58 million

2.84%

Alabama

9.2%

$18,787.70

$36.03 million

$92.52 million

2.60%

Missouri

8.9%

$20,058.95

$42.11 million

$108.12 million

2.44%

New York

8.5%

$16,833.40

$125.19 million

$321.47 million

2.90%

North Carolina

8.4%

$17,177.65

$61.46 million

$157.82 million

2.85%

New Jersey

8.2%

$21,298.78

$51.25 million

$131.61 million

2.30%

California

8.0%

$22,211.31

$206.18 million

$529.45 million

2.20%

Nevada

7.9%

$19,047.68

$17.06 million

$43.80 million

2.57%

Illinois

7.4%

$21,036.78

$71.47 million

$183.53 million

2.32%

Ohio

7.2%

$18,777.16

$65.61 million

$168.47 million

2.60%

Indiana

7.2%

$22,675.18

$36.28 million

$93.17 million

2.16%

Montana

6.6%

$11,963.24

$5.35 million

$13.74 million

4.09%

Virginia

6.5%

$19,340.75

$39.67 million

$101.88 million

2.53%

Colorado

6.4%

$22,159.12

$25.84 million

$66.36 million

2.21%

Rhode Island

6.2%

$18,543.22

$5.12 million

$13.15 million

2.64%

Florida

6.2%

$19,376.05

$95.70 million

$245.73 million

2.52%

Delaware

6.1%

$22,921.16

$4.33 million

$11.12 million

2.13%

Kansas

6.0%

$21,820.97

$13.49 million

$34.64 million

2.24%

Massachusetts

5.8%

$22,086.69

$29.38 million

$75.45 million

2.21%

Nebraska

5.7%

$15,622.98

$8.47 million

$21.76 million

3.13%

Michigan

5.7%

$19,127.41

$42.44 million

$108.99 million

2.56%

Connecticut

5.6%

$21,036.57

$15.37 million

$39.48 million

2.32%

Wyoming

5.6%

$24,067.11

$2.65 million

$6.82 million

2.03%

Idaho

5.4%

$17,444.44

$6.39 million

$16.42 million

2.80%

Pennsylvania

5.2%

$17,820.47

$52.14 million

$133.90 million

2.74%

Wisconsin

4.8%

$16,495.70

$21.75 million

$55.85 million

2.96%

Maryland

4.8%

$24,470.06

$20.81 million

$53.43 million

2.00%

Oregon

4.5%

$16,345.12

$13.62 million

$34.98 million

2.99%

Iowa

4.5%

$18,571.62

$10.83 million

$27.81 million

2.63%

South Dakota

4.2%

$16,040.68

$2.67 million

$6.86 million

3.05%

Washington

4.1%

$17,048.35

$21.07 million

$54.10 million

2.87%

Hawaii

3.8%

$21,096.90

$3.41 million

$8.77 million

2.32%

Minnesota

3.6%

$16,228.27

$14.92 million

$38.31 million

3.01%

Utah

3.3%

$21,617.24

$6.11 million

$15.68 million

2.26%

Vermont

3.1%

$22,553.77

$1.59 million

$4.08 million

2.17%

New Hampshire

2.9%

$26,653.71

$3.00 million

$7.71 million

1.83%

North Dakota

2.8%

$22,645.30

$1.58 million

$4.06 million

2.16%

Maine

2.4%

$14,906.68

$2.57 million

$6.59 million

3.28%

Alaska

1.9%

$21,299.66

$1,002,022.57

$2,573,028.07

2.30%

Key takeaways

1. The rate of unbanked households is disproportionately high among low-income households: Nationally, 7.7% of households had no bank accounts in 2013, but that rate was noticeably higher among low-income households. Nearly twenty percent of the households with incomes below $30k were not banked, while 24% of them were unbanked, meaning they had minimum one or more savings accounts account or but had utilized at least one other financial service during the previous year. These kinds of services include cashing checks, money orders and payday loans. More than a third (35.6 percent) of households that were not banked for the FDIC report stated that the primary reason they don’t have an account was that they didn’t have enough funds to keep in an account or to meet the required minimum balance. (Note that many do not require the minimum amount of balance.) Other reasons that are common include dislike or distrust of banks, as well as high or unpredictability of fees for accounts.

The nationwide correlation between unbanked and low-income households is reflected at the state level. Seven of the 10 states that have the highest percentages of unbanked individuals are among the states that have one of the highest median family incomes in the latest U.S. Census American Community Survey. In fact, excepting Washington, D.C., the nine states with the highest percentage of households that were not banked had household incomes lower than the 2013 U.S. median of $52,250.

2. The cost of not having a bank account have the greatest impact on households with lower incomes: Income among households who don’t have accounts with banks is especially low. The 2013 median post-tax income of non-banked households across the U.S. was $17,359, and was the lowest in Montana at $11,963.

Keep in mind that households with no bank accounts who use a prepaid debit card with no direct deposit have to are charged the equivalent of $488.89 in fees annually. In Montana this would be up to 4% of the average income of a household that is not banked. For context, the typical U.S. household spent about 3.5% of its post-tax earnings on gasoline as well as motor oils in the year 2015 as per the U.S. Bureau of Labor Statistics.

For Washington, D.C., the disparity in earnings between households with bank accounts and those without is vast. The average 2013 income for households that had a bank account D.C. was $55,032, but that was only $14,588 for households that didn’t have having a bank account. That latter number can’t go far in a place where housing options for those with low incomes are declining. According to the D.C. Fiscal Policy report, in 2013, there were only half the number of Washington apartment rentals under $800 per month than the 2002. The report suggests “subsidized housing is now virtually the only source for affordable housing.”

3. The local unbanked population reflects the national trend: According to the FDIC One-fifth of black households (20.5%) within the U.S. in 2013 were unbanked, followed closely by Hispanic (17.9 percent) as well as American Indian/Alaskan household (16.9%). Just 2.2 percent of Asian households were unbanked this was a lower proportion than that of white (3.6 percent) and Pacific Islander and Hawaiian (6.1 percentage) households.

The areas that have the highest percentage of households that are not banked mirror these national demographics. In No. 12 Tennessee and No. 2 Louisiana, the state’s largest city, has a high percentage of black households and the largest cities are Memphis at 63 percent as well as New Orleans at 59.8%. Phoenix is at the top of our list of unbanked metros, has a large Hispanic population and Albuquerque which is the largest town located in New Mexico, which tied with the seventh largest state. Two states with the highest percentages of unbanked populations, New Mexico and Oklahoma are home to American Indian populations nearly 10 times the size of that of the U.S. as a whole.

4. Limited access to in-person and online banking can be a hindrance it’s difficult to create a bank account if there aren’t any branches near where you reside. Nearly half of the ZIP areas in mid-South region are “bank deserts,” which means they’ve got the same or fewer branch banks, according to the Mississippi-based Hope Policy Institute, which examines the financial inclusion. The analysis of the institute shows that the mid-South comprises Mississippi, Louisiana and Arkansas where there are one of the highest percentages of unbanked households. This region includes the western region of Tennessee, home to Memphis in which almost one-fifth (19.5%) of households do not have a bank account.

Brick-and-mortar branches are even more important for consumers who can’t connect to financial institutions online. Certain Memphis residents have difficulties with both options. Based on the U.S. Census Bureau’s 2013 American Community Survey, 27.7% of Memphis households were without access to the internet, compared with 21.4 percent across the country. Lack of internet access is high in New Orleans, too, at 27.4%.

Sreekar Jasthi is a data analyst at NerdWallet the personal finance website. Email: . Laura McMullen is a staff writer at NerdWallet. Email: . Twitter: .

Methodology

The income and the concentrations of households with no bank accounts

To determine the median income of households that are not banked nationwide and across each state, we utilized data from the . To determine which metro areas to examine we first selected those 25 from the FDIC report with the largest number of households. We omitted San Diego-Carlsbad-San Marcos, California; Sacramento-Arden-Arcade-Roseville, California; and San Antonio, Texas, because of insufficient income data.

The percentages of households with no bank accounts within each state as well as metropolitan region are also taken from the FDIC report.

Fees associated with being unbanked

We arrived at the interval of $196.50 to $488.89 in fees for the average household without a bank account by adding in the fees that are associated with cash checks, money orders and prepaid debit cards. The cost of these fees depends in part on whether the debit cards that are prepaid allow direct deposit.

To figure out the costs of cashing checks for non-banked households with prepaid debit cards without direct deposit and unbanked households using only cash, we assumed two paychecks cashed per month and a cost of 1% of a check’s total value. For households using debit cards prepaid with direct deposit, we accounted for $0 for check cashing. For both households, we assumed one money order sent per month with an average cost of $1.40.

To calculate the average cashing of checks and money order fees, we analyzed the FDIC’s data on how often alternative financing services used by each kind of household (banked or non-banked) and then applied the lower frequency of use by households that are banked to the cost average.

In order to calculate the annual average cost of debit cards with prepaid options we evaluated 69 cards that were based on the major issuers, their high-traffic searches volume including Pew Charitable Trust’s as well as the card offerings listed on the websites of’s and. For cards that offer multiple plan options, we counted each plan as a separate card.

The analysis covers the annual cost of a prepaid debit card with and without direct deposit to pay payroll. The median monthly fee was $4.98, and the median out-of-network ATM fee was $2.50. We used the maximum cash loading fee of $4.95.

With no the direct deposit option, we assumed 12 monthly charges, four ATM fees per month , and two cash loading fees each month. Signature- and PIN-based transaction fees aren’t usually applicable to cards with monthly fees, so we omitted them.

Upcoming FDIC survey

A preview of the 2015. FDIC National Survey of the Unbanked and Underbanked Households, which is scheduled to be released in all its entirety on October. 20th, 2016, revealed that the number of households without a bank account dropped to 7%, or about 8.6 million households. The analysis of NerdWallet is based on the most recent full set of data available.

About the author: Laura McMullen writes about managing money for NerdWallet. Her writing has been featured in The Associated Press, The New York Times, The Washington Post, and other outlets.

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Netspend Prepaid Card Review Advertiser disclosure You’re our first priority. Every time. We believe that everyone should be able make financial decisions with confidence. And while our site doesn’t feature every company or financial product that is available We’re pleased that the guidance we offer and the information we offer and the tools we develop are independent, objective, straightforward — and completely free. So how do we make money? Our partners pay us. This can influence the products we write about (and the places they are featured on the site) however it in no way affects our advice or suggestions, which are grounded in hundreds of hours of study. Our partners cannot be paid to ensure positive reviews of their products or services. . Netspend Prepaid Card Review By Spencer Tierney Senior Writer | Certificates of deposit, ethical banking, banking deposit accounts Spencer Tierney is a consumer bank writer at NerdWallet. He has been covering finances for individuals since the year 2013, with a focus on certificates of deposit and other topics related to banking. His work has been featured on The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among other publications. He is based in Berkeley, California. Feb 10 2021 Edited By Alice Holbrook Assigning Editor | Banking, savings, and homebuying products Alice Holbrook joined NerdWallet in 2013 and is currently an editor on the home/mortgages team. Before that, she worked as an editor for the team that dealt with banking, covered insurance and banking as a journalist as well as working as a copy desk assistant. Her work has been featured on USA Today, MarketWatch, Newsweek and The Washington Post. Email:

. Many or all of the products we feature are made by our partners who pay us. This impacts the types of products we feature and where and how the product is featured on the page. But, it doesn’t affect our assessments. Our opinions are entirely our own. Here’s a list of and . Netspend’s prepaid debit cards are more expensive than a traditional checking account. They’re easy to get as there’s no banking history or credit check necessary to sign up, however, Netspend lets you pick either a month-long fee or paying a fee each when you purchase. In either case, you could incur more charges each year than you earn interest from your card’s savings account. There’s a reliable national network that includes more than 130,000 locations for cash reloads but it’s not completely cost-free and you don’t get ATMs accessible for free. Ideal for: People who want a payment card that won’t let you go negative or charge fees for overdrafts, in the event that you select the coverage for overdrafts. For those who have struggled with managing a bank account previously. Check out other alternatives: Take a look at the list below for Netspend Cards Pros 5.00 percent APY savings accounts for balances up to $1,000 and 0.50 percent APY on any balance that is greater than that. Easy access to adding and withdrawing cash within the network of merchants. Paychecks can be received up to two days early through direct deposit. Overdraft grace time or courtesy cushion are available with an optional overdraft protection. If you are looking for ways to improve your credit score? Discover Netspend Card Cons Steep monthly fee for the fee plan with the lowest fee and no option to reduce the fee entirely. The network is not free for cash withdrawals or cash reloads. Inactivity fee if you stop making use of the credit card and other fees that many cards that are prepaid don’t come with. Overdrafts are an option that costs you $20 per transaction, which can be used at least five times per month. Are you ready to start a savings account that is traditional instead? Check out the general information on prepay debit cards What is a credit card that is prepaid? A prepaid debit card is one type of credit card that only lets you use the money you have loaded into the card. They do not aid in building credit. Like a debit card, a prepaid card works with any retailer that accepts its payment network, which includes Visa, Mastercard or American Express. It’s more secure and easier than cash. Most prepaid cards have a mobile app to deposit checks or transfer funds. Learn more on our . Contrary to checking accounts, prepaid debit cards may lack some services such as free ATM branches, branch networks, as well as checks, among other things. If none of that appeals to you, see our list of . If you’ve been struggling with banks before you, take a look at . Prepaid debit card in comparison to. debit card and. credit card prepaid debit cards — pay prior to the card is loaded with money the card via cash or checks or direct deposit into the bank account prior to paying for transactions. Debit cards — pay now: You use funds directly from your checking account when paying for purchases or withdrawing funds from ATMs. Credit cards — pay later: You borrow money from a financial institution when you use your card. You repay the loan at a later date. How does FDIC insurance for credit cards that are prepaid? Prepaid debit cards almost always have FDIC insurance. This ensures that your funds safe in the event the issuer fails to pay its bills. Only financial institutions can be covered by FDIC insurance, so a prepaid card is either managed by a bank or a prepaid credit card company that partners with a bank to provide the insurance. You must register your prepaid debit card with your name and other information about your identity to be eligible for FDIC insurance and other protections. The author’s bio: Spencer Tierney is an expert in certificates of deposit at NerdWallet. Its work was featured by USA Today and the Los Angeles Times. On a similar note… Find an account that is more suitable for checking View NerdWallet’s picks for the best checking accounts. Go deeper into Banking Make smarter money decisions – straight to your inbox Sign up and we’ll send you Nerdy articles about the money topics that are important to you and other strategies to help you make the most out of your money.

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How to Start If You’ve Never Had a Bank Account

Advertiser disclosure You’re our first priority. Everytime. We believe that everyone should be able to make financial decisions with confidence. Although our website does not feature every company or financial product on the market however, we’re confident that the advice we provide, the information we provide as well as the tools we design are impartial, independent simple, and cost-free. So how do we make money? Our partners pay us. This could influence the types of products we review and write about (and where those products appear on our website), but it in no way affects our recommendations or advice that are based on hundreds of hours of research. Our partners are not able to promise us favorable review of their services or products. .

How to Get Started If You’ve Never Had A Bank Account

By Spencer Tierney Senior Writer | Certificates of Deposit and ethical banking, as well as banking deposits Spencer Tierney is a consumer bank writer for NerdWallet. He has written about personal finance since 2013, with a particular emphasis on deposits and certificates as well as other banking-related topics. He has had his work covered on The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among other publications. He is based in Berkeley, California.

Aug 11, 2020

Written by Carolyn Kimball Assisting Editor Los Angeles Times, San Jose Mercury News Carolyn has worked in newsrooms all over the nation as a reporter and editor. Her interests encompass personal finance, Sci-Fi novels and groovy Broadway musicals.

Many or all of the products featured here are from our partners who pay us. This influences which products we feature and the location and manner in which the product appears on a page. But, it doesn’t affect our assessments. Our opinions are our own. Here’s a list and .

The management of your money without a bank account is doable. But it can pose challenges — and the COVID-19 pandemic has only made it worse.

Your economic impact check may’ve arrived weeks or months after others’ did, in the form of an e-check or a prepaid debit card due to the fact that you didn’t have the faster delivery option of direct transfer into the bank account. If you’ve visited the store lately you may be asked to pay with a credit or debit card or with exact cash due to a nationwide shortage of coins and concerns regarding the spread of germs.

A bank account can be a boon in these scenarios, and other situations. To avoid problems in the future, consider opening one — or try again when you’ve had a rejection previously. Here’s a guide to getting to the point of starting.

Review your financial needs

If you’re among the 14 million people without a banking account within the U.S., you might have a system that works for you. Perhaps that means using alternative products such as credit cards that are prepaid and Check cashing companies. Financial advisor Brandy Baxter has assisted clients who have used check cashing services for practical reasons.

“They prefer to walk into their homes, then leave with cash in hand” says Baxter, an accredited financial advisor and financial coach who runs the firm Living Abundantly in the Dallas-Fort Worth area.

Check cashing establishments like Check ‘n Go and ACE Cash Express may operate for more hours that banks, and have easy approval processes for cash in a short time. But this comes with a steep fee, which could range between 1% and 6%, or more on top of the amount you pay for your check.

Bank accounts can meet money needs beyond what pre-paid cards or check cashing services are able to. For instance, their anti-fraud security can restrict the amount you pay if you’re victimized, and many accounts allow you to lock debit cards remotely when stolen.

Once you’ve established an association with a bank, other doors open: Credit cards and small business loans and cheaper alternative in payday loans may eventually be at hand.

Checking accounts “don’t just help you save costs; they’re the stepping stones to use different financial services,” says David Rothstein, principal at Cities for Financial Empowerment Fund which manages BankOn an online platform in the United States which encourages financial inclusion.

Find a bank that will work for your needs.

If you are afraid of banks or had trouble obtaining an account in the past the community banks or credit unions tend to be more friendly than national banks. They tend to be mission-driven, for example, focusing on the financial wellbeing of their communities.

“We’re very lenient at giving someone another chance,” says Pedro Murillo director of the branch in the San Francisco Bay Area for Self-Help Federal Credit Union. “If an employee comes in to apply for an loan and doesn’t have pay stubs, do they have anything else (can they) show us? Perhaps a letter sent by (their) boss? We’re not going to give up.”

Similar to other credit unions, Self-Help will require a person to open a savings account to join; the minimum to open an account is typically only a few dollars. Then members can apply for other products, like a credit builder loan.

You can search online for the word “CDFI” that stands for community development financial institutionwhich is a reference to . A lot of them require members to be located in the same area or state where the credit union or bank has branches.

What should you learn about applying

To open an account, you’ll usually require the Social Security number, one or two forms of identification and money for the first deposit.

It’s typical to apply for two accounts with a bank at once: a checking and savings account. The checking account grants access to debit cards as well as a bill payment system, among other services. The savings account lets you put funds aside and, in the ideal case, grow by accruing interest.

Banks usually screen applicants on ChexSystems, a national reporting agency that maintains records of closed accounts at the request of a person. If you have lost access to your bank account in the past it is possible that you will be refused by other banks until you have settled the ChexSystems account. This can mean the payment of debts to the bank or disputing mistakes on the record.

When you’ve been cleared, you can think of what banks typically refer to as an approved BankOn checking account. A lot of them don’t charge overdraft fees which are charged if you attempt to pay for something that would put your balance in the negative.

Finding and opening the right bank account involves some effort. Once you’ve been approved, having a secure place to keep your money, and a better chances of getting affordable loans will make it worth the effort.

“To have a checking account… is the foundation of any financial empowerment program,” Rothstein says.

This post was written by NerdWallet and was originally published by The Associated Press.

The author’s bio: Spencer Tierney is an expert in the field of deposits in certificates at NerdWallet. The work of Spencer Tierney has been featured by USA Today and the Los Angeles Times.

In a similar vein…

Find a better savings account

See NerdWallet’s picks for the best high-yield savings accounts online.

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What Is a Money Order? What is a Money Order? and where you can purchase one Advertiser disclosure You’re our first priority. Each time. We believe that everyone should be able make financial decisions without hesitation. And while our site does not include every company or financial product that is available on the market however, we’re confident that the guidance we offer, the information we provide as well as the tools we design are objective, independent, straightforward — and completely free. How do we earn money? Our partners compensate us. This may influence which products we review and write about (and the places they are featured on the site), but it does not affect our recommendations or advice, which are grounded in many hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. . What is a Money Order? How does a money Order Works and Where to Buy One A money order is a sure payment you can buy at places such as Walmart Post Office and even your bank. By Margarette Burnette Savings accounts as well as money market accounts banking Margarette Burnette is a savings expert who has written about bank accounts since before when she was writing about the Great Recession. Her work has been published in , and other major newspapers. Before becoming a part of NerdWallet, Margarette was a freelance journalist, with bylines appearing in magazines like Good Housekeeping, and Parenting. She is located in Atlanta, Georgia. Nov 23rd, 2022 Edited by Yuliya Goldshteyn Assistant Assigning Bank Yuliya Goldshteyn works as a banking editor for NerdWallet. She has previously worked as an editor, writer and research analyst in industries ranging from healthcare as well as market research. She earned a bachelor’s degree in history at the University of California, Berkeley as well as a master’s degree in sociology from the University of Chicago. You can reach her via

. Review by Kathleen Burns Kingsbury Wealth psychology expert and coach Kathleen Burns Kingsbury, founder of KBK Wealth Connection and host of the Breaking Money Silence podcast, is a widely published author and speaker. As an expert on finance psychology Kathleen is a regular on the television, and her writing has been published by The New York Times, The Wall Street Journal, “PBS NewsHour,”” Money magazine, Today Money, Forbes and CNBC. Kathleen worked as an adjunct faculty member at The McCallum Graduate School at Bentley University from 2009 to 2019. She is currently teaching for Champlain College. At NerdWallet the content we publish goes through rigorous . We have such confidence in the accuracy and quality of our content that we have external experts review our work. A majority or all of the products we feature are provided by our partners, who pay us. This affects the products we write about as well as the place and way the product appears on a page. However, this does not affect our assessments. Our views are our own. Below is a list and . Table of Contents Table of Contents Important points to remember about money orders A Money order can be a reliable option to use instead of cash, or personal checks; it works like an actual check, which means you can either cash it or deposit it into a bank account. If personal checks or cash puts you at risk, or they aren’t accepted for payment, you can make use of a money order. Cash or debit cards to purchase cash at the postoffice, Walmart, Western Union and many other locations. How do money order transactions work? A money order is a small piece of paper, which is a safe alternative to cash or personal checks. You specify who will receive the money order and both you and the person need to sign it in order for it to be valid, which cuts down on theft. You can also prepay for a money order when you buy it. You can purchase them in U.S. post offices, Walmart, Western Union and other places. Many have a $1,000 limit, including those that you purchase at banks. Generallyspeaking, you need to pay for money orders using cash or debit card. The Nerdy Tip: A money order is a good alternative to send money if you don’t have a bank account or you don’t wish to divulge your bank information for the beneficiary. Money orders: Pros and Cons There’s pros and disadvantages of using a money order. Be aware of these pros and cons before you make a decision to use one. Pros: No bank account required to send or receive a money order. Money orders are widely available. Cons If a money-order is cashable (or lost), it can be difficult, if it is not impossible to get your money back even if it’s because of a scam or fraud. Subject to cash advance fees and interest if bought with a credit card. (Read the details about .) How can I buy an order for money? Be aware of how and with whom you’ll pay: Prepare using cash or a debit card as well as the name of the payee and the amount you wish to pay. Paying with a credit card might be possible, but will usually cost extra. The form must be completed with the following information: Alongside the name of the person who is paying it is necessary to add your name (and perhaps an address) and then sign the purchase. (For detailed instructions on how to do this, check out NerdWallet’s guide on .) Be sure to verify that everything is accurate since you’ll be unable to alter the information later. Keep the receipt: The receipt will be a carbon duplicate of the money-order or a paper slip recording the information entered in the order. You may need it to trace the money order or to contact the place where you got it. Follow your money order The receipt should also include an identification number you can use to verify that the money transfer was made to the person you wanted it to. If you encounter any issues, contact the place where you purchased the money order for assistance. Back to top Where can I obtain a money-order? What does a money order cost? It is possible to purchase a money order at a post office, Walmart, Western Union and many other locations. Domestic money orders come in an array of prices starting at less than $1 all the way to about $5 dependent on the place you purchase them. It’s cheaper at Walmart or the convenience store or supermarket, and you’ll typically spend more at a bank. Some banks don’t offer international money orders; some Post offices offer them, but they are more expensive than domestic money orders. Whatever you decide to purchase them, it’s best to purchase money orders in the store in person. The seller Cost Walmart Up to $1. Money transfer agents (convenience stores supermarkets, convenience stores, etc.) Depends on the supplier. For instance, certain San Francisco-based Western Union providers charge $1. U.S. Postal Service Up To $500 $1.65. $501-$1000: $2.20. Money orders for military $55 cents. International (up up to $750): $49.65. Credit unions and banks rely of the bank. Often around $5. If you are looking for additional options for sending fund s ? We have a list of . What is a money order cost at the largest U.S. banks? This table that outlines the money order cost and available at a few popular banks. Be aware that some banks only offer money orders to accountholders. + Click here to learn about the cost of a money order and availability at some popular banks. Bank Money Order Information Not offered. Members of the FDIC Not available. The offer is not offered. Up to $1,000 for $5; free to premium account holders. Must be purchased in the branch. $5; no cost for premium checking customers. $5; free for premium customers with a checking account. $5 Free for premium customers who use their checking accounts. $5; no cost for members in the army. Up to $1,000 for $5. It must be bought at an office. Back to top When should I make use of money orders? There are instances when cash or personal checks can be risky, or they aren’t accepted as payment. Here are four examples of where you should consider using money order as the ideal payment method: You need to make sure that you send money safely. Contrary to checks, money orders do not include your bank account’s number, and they ensure that only the recipient can use it, unlike sending cash. You’re worried about bouncing a check. Since the money orders can be prepaid and are therefore able to pay, they can’t be rejected due to insufficient funds. Another option is a certified check or cashier’s cheque, both of which guarantee payment but don’t need to have an amount limit of $1,000, as do many money orders. ( and .) You’re sending money internationally. Not all money orders work overseas, but U.S. Postal Service money orders can be sent to up to 25 countries. Another option: A wire transfer (see ), if you need the money there quicker and can be able to pay more. You can also check out our . You don’t need a checking account. Since money orders require you to pay in advance, you don’t need a bank account and you can pay your bills in a safe manner. Nerdy Tip If you don’t have a checking account, another option for paying for regular purchases and bills is to make use of the . Back to top Savings Cash Management CD Checking Money Market Savings accounts are a place where you can save money in a safe manner and earn interest. A savings account is a place where you can store money securely while earning interest. FDIC SoFi Savings and Checking APY 3.75% FDIC SoFi Savings and Checking with APY of 3.75% SoFi members who make direct deposit get up to 3.75 percent annual percentage yield (APY) on savings balances (including vaults) and 2.50% APY on checking balances. No minimum direct deposit amount that is required to be eligible for 3.75 percent APY for savings and 2.50% APY for checking balances. Direct deposit members will get 1.20% APR on all balances in checking and savings (including Vaults). Interest rates are variable and may change at any time. These rates are current as of 01/04/2023. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet Min. balance for APY: $0 Member FDIC Marcus Online Savings by Goldman Sachs Bank with APY 3.50 percent 3.50% Annual Percentage Yield (annual per cent yield) with $0 minimum balance to earn stated APY. Accounts must have a positive balance in order to be open. APY valid as of 02/07/2023. Min. balance for APY The cash accounts offer a variety of services and features comparable to checking, savings or investment accounts into one. These accounts for managing cash are usually offered by non-bank financial institutions. They combine the features and services that are similar to savings, checking and investment accounts into one package. The cash management account is generally provided by non-bank financial institutions. On the website of Wealthfront, you can find Wealthfront Cash Accounts APY 4.05 percent min. amount to APY $1 on Betterment’s site Betterment Cash Reserve Paid Non-Client Promotion APY 4.00 Percent Annual percent return (variable) is at 02/06/2023. Min. balance for APY CDs of $0 (certificates of deposits) are a type of savings account with a fixed rate and term, and usually have higher interest rates than standard savings accounts. CDs (certificates of deposit) are a type of savings account with a fixed rate and term typically, and have more interest rates than traditional savings accounts. CIT Bank CD APY 4.60% 1.5% Term 1.5 years FDIC Marcus by Goldman Sachs High-Yield CD APY 4.6 FDIC Marcus by Goldman Sachs High-Yield CD APY 4.40 percent 4.40% APY (annual per cent yield) at 01/25/2023. 1 year Member FDIC SoFi Checking and Savings APY 2.50% SoFi members with direct deposit can receive up 3.75 percent annually percentage return (APY) in savings account balances (including Vaults) and 2.50 percent APY on checking balances. No minimum amount of direct deposit required to qualify for the 3.75% APY for savings accounts and 2.50 percent APY on checking balances. Customers who do not deposit direct deposits receive 1.20 percent APY on all account balances of savings and checking (including Vaults). The rates of interest are subject to fluctuation and are could change at any time. These rates are current as of 01/04/2023. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet Monthly fee $0 Upgrade Rewards Checking APY N/A Monthly fee $0 Deposits are FDIC Insured Current Account APY N/A Monthly fee $0 Deposits are FDIC Insured Chime Checking Account APY N/A Monthly fee $0 Member FDIC Axos Bank(r) Rewards Checking APY 1.25% Receive monthly direct deposits totaling $1,500 or more to earn 0.40% APY. Make use of Your Axos Visa(r) Credit Card for up to 10 transactions each monthly (min $3 per transaction) or sign up for Account Aggregation/Personal Finance Manager (PFM) in Online Banking to earn 0.30 percent APY. Maintain an average daily amount of $2,500 in an Axos managed Portfolios Investment Account for 0.20 percent APR. Maintain a daily average balance of $2,500 with an Axos Self Directed Trading Invest Account in order to receive 0.20 percent APR. Utilize Your Rewards Checking Account for the full month’s Axos customer loan payment to earn 0.15% APR. Monthly fee $0 Market accounts earn rates comparable to savings accounts, and come with some checking features. Market accounts earn rates that are similar to savings accounts, and come with some checking features. Members FDIC UFB Best Money Market APY 4.21 Percentage Min. balance for APY $1 Member FDIC Discover Bank Money Market Account APY 3.20 percent Min. Balance for APY $1 tracking of money orders It’s relatively simple to find out where a money order is — provided you’ve saved the receipt. However, the procedure varies depending on the issuer. The U.S. Postal Service and MoneyGram allow you to track your online purchases using details like the serial number on the receipt along with the purchase amount. Banks should be in a position provide you with the same information. If you don’t have the receipt, you’ll probably be required to file a request to find your money order’s serial number, and that’s expensive and long-winded. At MoneyGram for instance the fee is $40, and takes up to 60 days to take to process. Be sure to keep track of the money order with the provider that you actually use — it might be Western Union or MoneyGram even when you bought it from the convenience store. The money order should clearly show or state the name of the service provider. Back to top About the author: Margarette Burnette, a expert in the field of savings accounts at NerdWallet. She has had her work highlighted in USA Today and The Associated Press. Similar to… Find an improved savings account. Check out NerdWallet’s recommendations for the top high-yielding savings accounts online. Explore Banking further Find more money-saving strategies right to your inbox. Sign-up and we’ll send you Nerdy posts about the money topics that matter most to you and other strategies to get more from your money.

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Emergency Fund What is it and why it is important

Advertiser disclosure You’re our first priority. Every time. We believe that every person should be able to make financial decisions with confidence. While our website doesn’t feature every company or financial product that is available, we’re proud that the advice we provide and the information we offer and the tools we develop are impartial, independent simple, and cost-free. How do we earn money? Our partners pay us. This can influence the products we review and write about (and where those products appear on the website) however it in no way affects our suggestions or recommendations, which are grounded in many hours of study. Our partners cannot promise us favorable reviews of their products or services. .

Emergency Fund What is it and Why It Matters

The best place to keep it is a savings account An emergency fund can be helpful for emergencies.

By Margarette Burnette, Senior Writer Savings accounts, money market accounts, banks Margarette Burnette is a savings expert who has been writing about bank accounts since prior to even the Great Recession. Her writing has been featured in major newspapers. Before being a member of NerdWallet, Margarette was a freelance journalist who had bylines in magazines such as Good Housekeeping, and Parenting. Margarette is located close to Atlanta, Georgia.

Dec 21, 2021

Reviewed by Kathleen Burns Kingsbury Wealth psychology expert and coach Kathleen Burns Kingsbury, founder of KBK Wealth Connection and host of the Breaking Money Silence podcast, is a widely known writer and speaker. As an expert on the psychology of money, Kathleen was featured on TV, and her work has been featured by The New York Times, The Wall Street Journal, “PBS NewsHour,” Money magazine, Today Money, Forbes and CNBC. Kathleen was an adjunct faculty instructor at the McCallum Graduate School at Bentley University from 2009 to 2019 and currently teaches for the Champlain College. Champlain College.

At NerdWallet, our content goes through a thorough . We are so confident in our reliable and helpful content that we allow external experts review our work.

Many or all of the products we feature come from our partners, who pay us. This affects the products we review as well as the place and way the product is featured on the page. But this doesn’t influence our evaluations. Our opinions are our own. Here is a list of and .

What is an emergency fund?

A savings account is savings account that has money set aside to pay for major, unexpected expenses such as:

Unforeseen medical expenses.

Repair or replacement for your home appliance.

Major car repair.

Unemployment.

Compare the best savings accounts

Find a high-yield savings account with a good rate. Compare rates by comparison.

Why do I require an emergency account?

The emergency fund is a financial buffer that can help you stay afloat during a moment of crisis without relying for credit or loans. It’s especially important to keep an emergency fund in place if you have debt, because it can aid in avoiding borrowing more.

“One among the initial steps towards climbing from debt to offer yourself a chance to not be further in credit,” says NerdWallet columnist Liz Weston.

What should I save?

The short answeris: If starting out small, put aside at minimum $500, then begin to build up to a half-year’s worth of expenses.

The longer answer is that the right amount you should spend depends on your financial situation A good rule of thumb is to to cover 3 to 6 months’ worth of living expenses. (You may need more in case you are a freelancer or working seasonally as an example, or if your job is difficult to find a replacement for.) If you do lose the job you have, then you could make use of the funds to cover the costs of living until you search for a replacement or be used to supplement your unemployment benefits. Start small, Weston says, but start.

Even a small amount of savings can get you out of many financial scrapes. Save something now and build your money over time.

>> Looking for top savings options? Here are our recommendations for you .

Where should I place my emergency money?

A savings account that has an excellent interest rate and easy access. Because emergencies can strike at any time making it easy to access your account at any time is vital. Therefore, it should not be tied in a long-term investing fund. The account should however be separate from the account at your bank that you are using every day, so that you don’t have the temptation to draw funds from your account.

A is a great location to store your money. It is federally insured up to $250,000 per depositor, so it’s safe. The money earns you interest and you are able to access your cash quickly when needed, whether through withdrawal or a funds transfer.

Saves CD Management Checking Money Market

Member FDIC

SoFi Checking and Savings

APY 3.75 Per cent SoFi members with direct deposit can receive up 3.75 percent per year in annual percentage yield (APY) on savings balances (including Vaults) and 2.50% APY on check balances. The minimum amount of direct deposit required to qualify for the 3.75% APY for savings, or the 2.50 percent APY on checking balances. Direct deposit members will receive 1.20 percent interest on balances of savings and checking (including Vaults). Rates of interest are subject to change and can change at any time. The rates listed are current as of 01/04/2023. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet

Min. balance required for APY $0

Member FDIC

Marcus is a product of Goldman Sachs Online Savings Account

APY 3.50 percent 3.50% Annual percentage yield (annual per cent yield) with $0 minimum balance to earn stated APY. Accounts must be in an open balance in order to stay open. APY current as of 02/07/2023.

Min. balance for APY $0

They combine the features and services that are that are similar to savings, checking and/or investment accounts in one package. Cash management accounts are generally provided by non-bank financial institutions.

These cash accounts combine features and services that are similar to checking, savings or investment accounts into one product. Cash management accounts are usually offered by non-bank financial establishments.

on the Wealthfront website.

Wealthfront Cash Account

APY 4.05 percent

Min. balance for APY $1

on Betterment’s site

Betterment Cash Reserve – Paid non-client promotion

APY 4.00 percent Annual percentage yield (variable) is as of 02/06/2023.

Min. balance required for APY $0

CDs (certificates of deposit) are a form of savings account that comes with the option of a fixed rate and time, and usually have higher interest rates than traditional savings accounts.

CDs (certificates of deposit) are a form of savings account that has an interest rate fixed and a term generally, and have higher rates of interest than standard savings accounts.

CIT Bank CD

APY 4.60%

Time 1.5 years

Member FDIC

Marcus By Goldman Sachs High-Yield CD

APY 4.40 percent 4.40% APR 4.40% (annual per cent yield) as of 01/25/2023

Term 1 year

Checking accounts are utilized for day-to-day cash deposits and withdrawals.

Checking accounts can be used to make daily cash deposits as well as withdrawals.

Member FDIC

SoFi Checking and Savings

APY 2.50% SoFi members with direct deposit are eligible to receive up 3.75 percent per year in annual percentage yield (APY) on savings balances (including Vaults) and 2.50% APY on checking balances. The minimum amount of direct deposit needed to qualify for 3.75% APY for savings and 2.50 percent APY on checking balances. Customers who do not deposit direct deposits will get 1.20 percent APR on all balances of savings and checking (including vaults). Rates of interest are subject to change and may change at any point. The rates shown were last updated on 01/04/2023. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet

Monthly fee of $0

Upgrade Rewards Checking

APR N/A

Monthly fee $0

The deposits are FDIC Insured

Current Account

A/P N/A

Monthly fee of $0

Deposits are FDIC Insured

Chime Checking Account

APR N/A

Monthly fee of $0

Member FDIC

Axos Bank(r) Rewards Checking

APY 1.25% Earn monthly direct deposits that total $1,500 plus to receive 0.40% APY. Make use of the Axos Visa(r) Debit Card to make a maximum of 10 transactions each month (min 3 cents per transaction) or enroll for Account Aggregation/Personal Financial Manager (PFM) within Online Banking to earn 0.30 percent APY. Keep an average daily amount of $2,500 on An Axos Managed Portfolios Invest Account to earn 0.20% annual percentage yield. Maintain a daily average amount of $2,500 with An Axos Self Directed Trading Investment Account in order to receive 0.20 percent APY. Utilize your Rewards Checking account for your entire monthly Axos Consumer loan payment and earn 0.15% APY.

Monthly fee $0

The money market accounts have rates that are similar to savings accounts, and come with some checking features.

Market accounts for money pay interest rates that are similar to savings accounts. They also have some checking features.

Member FDIC

UFB Best Money Market

APY 4.21%

Min. balance required for APY $0

Member FDIC

The Discover Bank Money Market Account

APY 3.20 percent

Min. balance required for APY $1

How do I build an emergency fund?

Calculate the amount you wish to save. Follow the steps below if you require assistance in calculating your expenses for six months.

Set a monthly goal for savings. This will allow you to get to the habit of saving regularly and will make the task less daunting. One way to achieve this is to automate the transfer of funds to your savings account each when you are paid.

Transfer money to your savings account automatically. If your company offers direct deposit, there’s a good possibility that they will split your pay into multiple checking and savings accounts so that your monthly savings goal is met without having to touch the checking accounts of your account.

Keep the money. Utilize the mobile device to store each when you purchase. You can connect with checking or other spending accounts to add up the total amount you spend on purchases. The excess amount is then transferred to a savings account.

Save your tax refund. You get a shot at this every year- and only if you expect a refund. Saving it can be an easy method to increase your emergency stash. If you are filing your taxes, think about having your refund transferred directly to your emergency account. Alternately, you could think about changing your deductions tax deductions to make sure you’re not wasting cash to withhold. If changing your deductions is an option that is suitable for you, you can put the extra money into your emergency reserve.

Assess and adjust contributions and adjust. Check in after a while to see how much you’re saving and adjust if needed especially if you’ve recently drained money from your emergency account. On the other hand when you’ve saved enough to pay for six months of expenses , and have cash left over you could consider investing the additional funds instead.

Here’s what you should do if you think you might have

When saving, draw a line between emergencies and all other. In fact, once you’ve reached a certain amount of emergency savings, Weston suggests it’s an excellent idea to open a second savings account to save for sporadic but necessary items, like car repairs or vacations, as well as clothing. If you require help to stay organised, banks will allow customers to create and label sub-accounts to meet various financial goals.

Everyone should be saving for the unexpected. The ability to have a reserve fund could be the difference between getting through an economic storm that is short-term or falling into deep debt.

Use this calculator to start. It will only take a few minutes:

From top to bottom

About the author: Margarette Burnette is a savings account specialist at NerdWallet. She has had her work featured on USA Today and The Associated Press.

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Prepaid Debit Cards Are Popular However, they have their own drawbacks.

Advertiser disclosure You’re our first priority. Each time. We believe that everyone should be able to make financial decisions with confidence. And while our site does not include every company or financial product available on the market however, we’re confident that the advice we provide and the information we offer and the tools we create are impartial, independent, straightforward — and completely free. How do we earn money? Our partners pay us. This can influence the products we write about (and the way they appear on the site), but it in no way affects our recommendations or advice, which are grounded in many hours of research. Our partners cannot promise us favorable ratings of their goods or services. .

Prepaid Debit Cards are Popular However, they have their own drawbacks.

By Spencer Tierney Senior Writer | Certificates of deposit and ethical banking, as well as banking deposit accounts Spencer Tierney is a consumer banker at NerdWallet. He has written about the personal financial sector since with a focus on certificate of deposit and other banking-related subjects. His work has been featured by The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among other publications. He is located in Berkeley, California.

Aug 10, 2016

The majority or all of the products we feature are provided by our partners who pay us. This affects the products we feature and where and how the product appears on the page. However, this does not influence our evaluations. Our opinions are our own. Here’s a list of and .

Visit one of the convenience stores like 7-Eleven or CVS Pharmacy and you’re likely to find a few prepaid debit cards hanging on a rack.

They are also employed for budgeting and as checking account substitutes, are getting more popular. The number of purchases on cards issued by the top prepaid issuers grew by 15.7 percent in 2014 to the previous year, according to The Nilson Report, which analyzes the data of the payment industry.

>> MORE:

Despite their popularity they do face their share of problems. In the past year, both the and experienced technical glitches that resulted in cardholders getting locked off their cards for up to a week. At that point, any funds on these cards, including income that had been directly transferred to them, was unavailable. But even outside of drastic situations the prepaid debit cards come with numerous disadvantages.

Frequent fees

Prepaid debit cards typically charge fees for services you are used to with a checking account, like free ATM use, customer support, and online and mobile services. In contrast to checking accounts, prepaid cards often don’t offer ways to waive their monthly charges.

>> MORE:

Janice Elliot-Howardis an author from Atlanta was the first to get a prepaid card that charged her a small fee every time she bought something. When she realized the amount the card was costing her the card, she immediately canceled it and bought one that doesn’t charge transaction fees for purchases.

She isn’t able to avoid the cost of all fees, but.

“The disadvantage is the ATM surcharge [for cash withdrawals], however, I do that very rarely,” she says.

One of the benefits of debit cards that are prepaid is they do not allow overdrafts or charge overdraft fees. If you have a checking account, you can get hit with an of around $30 or $35 for spending more than the amount you have in your account. But the frequent charges for transactions or ATM withdrawals could be significant.

Card details aren’t always clear

Elizabeth Avery bought a prepaid debit card at a drugstore to take her on a trip abroad but then realized that the card could not be used in foreign countries.

“I discover that the fine print is where I’m seeing the issues,” says Avery, founder of travel website Solo Trekker 4 U and a private equity investment banker located in Washington, D.C. She was planning to use the card at ATMs in the international market to get cash and had found no mention on the outside packaging that it was only for domestic use.

And that’s not the only information that can be missing.

“The disclosures for prepaid cards that are sold in retail don’t require that all fees to be disclosed on the outside packaging,” says Thaddeus King who is part of the consumer banking project at the Pew Charitable Trusts in Washington, D.C.

There is still no protection

The debit card you use to pay for purchases, which are similar to debit and credit cards belong to payment processors like Visa or MasterCard. In the end, you can get protection against fraud on cards, but not the broader protections you can get from an account at a bank.

“When it is about payment of bills or ATM transactions, these cannot be done through either the Visa nor MasterCard networks,” King says.

Other payment platforms have similar exclusions. For those transactions, King adds, you must depend on the disclosures provided by your card, which may not include protections apart from those on purchases.

The debit cards that are prepaid don’t have to be insured by FDIC. Federal Deposit Insurance Corp. (FDIC). FDIC, which is how customers can get their money back if their bank or card issuer is unable to meet their requirements. While many prepaid issuers provide protection on their own however, their agreements with cardholders may say that the terms are subject to change at any time.

Checking accounts, in contrast, must have more fraud protection because it covers both electronic as well as ATM transactions. They also have to be protected with the FDIC.

Good news for debit card holders with prepaid cards may be in the works. According to the Consumer Financial Protection Bureau plans to release its plans later this year, which will increase protections against fraud on these cards to match those that cover debit and checking accounts.

“Prepaid debit card users should have the same protections as debit card holders,” says Christina Tetreault, legal counsel at the staff of Consumers Union in San Francisco.

About the author: Spencer Tierney is an expert on deposits and certificates at NerdWallet. The work of Spencer Tierney has been featured on USA Today and the Los Angeles Times.

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Used Car Prices Are Dropping: What That Means for Car Buyers

Advertiser disclosure You’re our first priority. Everytime. We believe that every person should be able to make financial decisions without hesitation. Although our site doesn’t include every business or financial product that is available in the marketplace We’re pleased that the guidance we offer, the information we provide and the tools we develop are impartial, independent simple, and cost-free. So how do we make money? Our partners pay us. This may influence which products we write about (and where those products appear on our site) however it in no way affects our advice or suggestions that are based on hundreds of hours of study. Our partners do not pay us to guarantee favorable ratings of their goods or services. .

Used Car Prices are dropping What Does This Mean for Car Buyers

The prices of used cars saw a huge drop in December, but buying a car now can still be prohibitive for some buyers.

Written by Whitney Vandiver Writer | Car ownership, maintenance of cars Whitney Vandiver writes for NerdWallet about how car owners can save money on ownership and maintenance. She was previously a writer in the oil and gas industry which led to her being recognized in national newspapers as well as international magazines. Whitney started writing because of enjoyment and finds stories that highlight or help the LGBTQ+ community the most satisfying to write. In her spare time, she loves walking and reading with her Irish Wolfhound. She’s based in Houston.

Feb 1st, 2023

Edited by Julie Myhre-Nunes Assistant Assigning editor Auto loans and consumer credit Julie Myhre-Nunes works as an assistant editor assigned to NerdWallet. She has been working in the personal finance space for more than 10 years. Before becoming a part of NerdWallet, Julie oversaw editorial teams at NextAdvisor, Red Ventures and Quote.com. Her personal finance insight has been featured in Forbes, The Boston Globe and CNBC through the years. Julie’s articles have been published through USA Today, Business Insider and Wired Insights, among others. Email: .

A majority of the items featured on this page are provided by our partners, who pay us. This affects the products we write about and where and how the product is featured on a page. However, this does not influence our evaluations. Our opinions are entirely our own. Here’s a list of and .

In the aftermath of more than a year of overheated prices, the used-car market cooled by a few degree in the month of December.

The trend brings some relief to those who buy cars. But inventories have yet to reach pre-pandemic levels, and consumers are still unable to enjoy the buying power they had in 2019.

Although experts predict that the used car market for this year will improve the consumers must have realistic expectations of what buying a car will look like in 2023.

December saw a record-breaking decline in used car prices

According to a January 2023 report from CoPilot, a personalized app for car buying, used-car prices fell to a record low in the month of December. It was the sixth consecutive month, with a drop of 8.8 percent from January 2022. For a better understanding this drop was the biggest annual drop the used-car segment has seen since the last month of the Great Recession in June 2009.

However, they’ve left a long way to go before buyers are in familiar territory — the median used-car price was 30.1 percent higher than a normal market price.

Markets are seeing “more of a slow return to normalcy than what is typically an economic decline,” says Joseph Yoon the consumer insights analyst at Edmunds, an online car guide. “The prices are still very high, extremely, and very overvalued.”

Interest rates still hamper used-car access to affordable financing

One of the factors that affect used car prices is the Federal Reserve’s aggressive increase in interest rates due to rising inflation.

According to Edmunds the average cost of a used-car loan increased from 8.76 percent in July to 10.25% in December. As loan rates rise, consumers who finance vehicle purchases will find they’re paying more , despite the lower prices on the sticker.

What this means for car buyers

Consumers planning to buy a used car this year could be happy to see lower costs for windshields but will still find they need to navigate an overcrowded car market. Prospective buyers need to anticipate certain trends when they shop for a used car this year.

Prices are lower compared to 2022.

If the demand for used cars wanes, prices should remain in decline. Based on J.P. Morgan Research, prices for used cars could fall as much as 10 percent to 20% by 2023. If it is the case that the Fed continues to increase interest rates, vehicle prices will likely continue to fall in a downward trend.

However, not all cars will be priced at the same rate. Smaller cars and pick-ups have seen the least changes in price in the last year, according to Cox Automotive, an auto data company — while the luxury cars and SUVs have seen the biggest price decreases.

The continuation of a cost that is higher than normal

With the price of used cars dropping and attract potential buyers, the increase in interest rates will mean consumers who require financing for their purchases will continue to feel the strain of an overpriced market.

Buyers of cars who take advantage of lower prices and financing purchases despite increased interest rates could pay more for cars over the life of a loan. Along with a larger monthly payment, they could be faced with negative equity in the future, finding themselves .

Values for trade-ins fluctuate

As per J.D. Power the research and data firm, trade-in vehicles in December received an average value of just $786 in value when they were that were traded in June. As dealerships expect to earn less from used car sales the value of trade-ins are expected to continue to decline compared to the previous year.

Car owners looking to sell their current vehicles should expect lower prices than those available in the previous year.

“It’s expected to represent a significant reduction of what you’re gonna get from the value of your trade-in when you were in search of an auto at the end of September” claims Terrance Gandy who is the sales manager for used cars for Route 44 Toyota in Raynham, Massachusetts.

Affluent, but relatively low inventory levels

As automakers work towards the production levels of pre-pandemics and used vehicles are getting more affordable, the consumer demand is still expected to be high following the vehicle shortage of years past, according to J.D. Power. This will reduce the inventory of used cars since more buyers are likely to purchase vehicles after waiting to see the prices of used cars which reached their highest in September.

“Even even if prices come downwards,” says Yoon, “for the foreseeable future we’ll be millions of cars short of used cars.”

This will allow certain consumers have a better chance when it comes to bargaining offers for trade-ins.

“They have a much better likelihood of negotiating now because dealers have to take these cars off their lots,” says Gandy. “The ball is kind of in your court if you do decide to trade-in your vehicle because right now dealers are in need of your vehicle.”

About the writer: Whitney Vandiver is a writer for NerdWallet currently focusing on car ownership and maintenance. She has previously written about payments for small businesses and payment.

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Used Car Prices are Dropping: What That Means for Car Buyers

Advertiser disclosure You’re our first priority. Every time. We believe that everyone should be able to make sound financial decisions without hesitation. While our website does not include every company or financial product that is available on the market, we’re proud that the advice we provide and the information we offer as well as the tools we design are objective, independent easy to use and completely free. So how do we make money? Our partners compensate us. This may influence which products we write about (and the way they appear on the site) however it in no way affects our advice or suggestions that are based on thousands of hours of research. Our partners are not able to be paid to ensure positive ratings of their goods or services. .

Used Car Prices are dropping What Does This Mean for Car Buyers

Used-car prices took a big drop in December, but purchasing a vehicle now could still be expensive for certain buyers.

by Whitney Vandiver Writer | Car ownership, car maintenance Whitney Vandiver writes for NerdWallet on ways that car owners can reduce the cost of ownership and maintenance. She has previously written for the petroleum and gas industries, which led to her being published in national journals as well as international magazines. Whitney started writing because of love and finds stories that showcase or assist the LGBTQ+ community the most satisfying to write. If she’s not working, she’s walking, reading, and walking her Irish Wolfhound. Her home is in Houston.

Feb 1 2023

Written by Julie Myhre-Nunes,, Assistant Assigning Editor Auto loans, consumer credit Julie Myhre-Nunes works as an assistant editor assigned to NerdWallet. She has been working in the area of personal finance for more than 10 years. Before being hired by NerdWallet, Julie oversaw editorial teams at NextAdvisor, Red Ventures and Quote.com. Julie’s personal financial insights have been highlighted in Forbes, The Boston Globe and CNBC over the years. Julie’s writings have been featured through USA Today, Business Insider and Wired Insights, among others. Email: .

The majority or all of the items featured on this page are provided by our partners who pay us. This influences which products we feature as well as the place and way the product appears on the page. However, this does not influence our opinions. Our opinions are our own. Here’s a list of and .

Following more than one year of overheated prices, the used-car market cooled by a few degrees in December.

The new trend offers some relief for car buyers. However, inventories aren’t yet get to levels pre-pandemic and consumers still miss the purchasing power they enjoyed in 2019.

While experts say this year’s used-car market will improve the consumers must have realistic expectations of what buying a car will look like in 2023.

December saw a record drop in used-car prices

According to a report from January 2023 from CoPilot, a personalized app for buying a used car, used car prices dropped to a record low in the month of December. It was the sixth consecutive month, dropping 8.8% since January 2022. To put it in perspective, this plunge was the largest annual drop the used car market has experienced since the final month during the Great Recession in June 2009.

But they’ve left a long way to go before they’re in familiar territory — the median used-car cost was 30.1 percent higher than a normal market price.

Markets are seeing “more of a gradual recovery than one would normally consider a decline,” says Joseph Yoon, consumer insights analyst at Edmunds, an online guide to cars. “The prices are very high, extremely, and very higher.”

Interest rates still hamper used-car access to affordable financing

One of the factors that affect used car prices is the Federal Reserve’s abrasive rate of interest hikes in response to the rising rate of inflation.

According to Edmunds, the average interest rate for a used-car loan grew from 8.76 percent in July to 10.25% in December. As loan rates rise those who finance car purchases will pay more car, even with lower prices on the sticker.

What does this mean for car buyers

Consumers planning to buy an used vehicle this year may be pleased to see lower windshield prices but will still find they must navigate a crowded car market. Prospective buyers need to anticipate certain trends when they shop for a used vehicle this year.

Cheaper prices compared to 2022

As the demand for cars used wanes, prices should continue to drop. According to J.P. Morgan Research, prices for used vehicles could fall as much as 10 20 to 20% by 2023. Should the Fed continues to increase rates of interest, the cost of vehicles will likely keep their downward trend.

However, not all models will drop in price at the same time. Smaller cars and pick-ups have seen the least changes in price from January 2022 according to Cox Automotive, an auto company that collects data — while high-end vehicles and SUVs have experienced the biggest price decreases.

In the event of a continuation of an ownership cost higher than normal

With the price of used cars dropping, tempting potential buyers, the surge in interest rates will mean consumers who need to finance their purchases will likely continue to feel the pressures of the inflated market.

Car buyers who take advantage of falling prices and make finance purchases in the midst of higher interest rates might pay more for cars for the duration of the loan. In addition to a greater monthly installment, they may have negative equity at the end of the tunnel when they find themselves .

Variable trade-in value fluctuations

Based on J.D. Power which is a firm that conducts research and data that tracked trade-ins in December, vehicles were able to receive an average of $786 less in trade-in value than those traded last June. Since dealerships are expected to earn less from used car sales the value of trade-ins will continue to decrease in comparison to the prior year.

People who plan to trade in their current cars should be prepared for lower prices than the ones offered in the past year.

“It’s likely to result in a substantial drop of what you’ll get from the trade-in price compared to the price if you were searching for an auto in September,” claims Terrance Gandy as the manager of used car sales for Route 44 Toyota in Raynham, Massachusetts.

Increased but relatively low inventory levels

Automakers are working towards pre-pandemic production levels and used vehicles are getting more affordable, the consumer demand is still expected to be high following the shortage of vehicles in years past, according to J.D. Power. This will reduce the inventory of used cars because more people are choosing to purchase vehicles after waiting to see the prices of used cars which reached their highest in September.

“Even even if prices come lower,” says Yoon, “for the next few years we’ll still be millions of cars short of used car inventory.”

But that will help certain consumers have a better chance when it comes to bargaining offers for trade-ins.

“They have a greater chance of negotiating right now because dealers have to take these automobiles off their showrooms,” says Gandy. “The ball is kind of in your hands if are able to trade in your car since these dealers need your car.”

About the author: Whitney Vandiver is a writer at NerdWallet currently focusing on the maintenance of vehicles and car ownership. She has previously written about payments for small businesses and payment.

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