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Visa Global Financial Education Program Senior Director Jason Alderman on the factors leading many to not have a bank account and its financial impact...
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Yeah this really hard to believe but ten million US households.
Don't have any time -- bank account at all a new survey released by the FDIC says that more and more people are turning to prepaid cards.
Payday loans -- even -- shops.
But -- that actually is a cost burden on the economy and on you and me as well.
With me now is Jason Alderman senior director for -- global financial education and -- really surprised by this number because it seems like without a bank account it would be very hard to do very basic things like pay your rent.
I mean if in fact -- go had this.
It is it's very hard and it's very expensive you know people have -- these.
Very elaborate and expensive workarounds for things that we take for granted that we can do with a regular banking account.
So why do people not why did ten million households out they're not have a bank account what's the impediment.
Well these economic Gypsies it's it's a variety of things you know for many people it's very intimidating going into a bank you know big marble building with people behind bulletproof glass and guards -- hushed -- it's about -- -- -- going to the dentist in the -- combined so.
It can be very hard for a lot of people to want to go into a bank.
People also are very skeptical of banks there's been nothing but a steady stream of bad news about banks and I'm not sure that they can trust banks are they not legal citizens is that part of it.
I think many people are concerned about that even if they are legal or can legally open a bank account they're still afraid you know if if you entered this country illegally at one point -- or if you don't speak English banks can be a scary place.
So what the cost me implied in the beginning to this that there is a cost to the rest of us who do have bank accounts what's the cost the rest of us.
Well you know this is really a drag on the overall economy and think about these people you know there's at -- 8%.
The American population is on bank they have no affiliations with a bank another.
20% of the American population has a limited affiliation with a bank and they're still using payday lenders and check captures so that's 28% American population that is under bank and so what that means is.
They can't get loans to do things like buy a house buy new cars started new business there -- lots of things they could do to contribute to the economy that they simply aren't.
So it's a drag on me because they're not out their fueling the economy.
You know that's events -- that's -- very strong argument given that the that's coming I don't know why that's necessarily a drag on me I certainly feel for these people I think that they should -- bank accounts and I understand why it's more expensive to them but I don't know what the burden on me again.
It's a these these are people who could be producing more for the entire Condit that simply aren't I mean these are you know these are auto jobs that aren't being have these are keeping real estate prices lower.
-- small businesses that could be creating jobs that aren't creating jobs.
No and these these are folks who really are on the margins of society and when they are.
It doesn't do any of us any favors and certainly there is you know a lot of be abusive practices targeted at them -- -- when you talk about these payday lenders who just charge and usery rates.
To simply cash someone's paycheck if they're getting that.
So what do about this problem how do you turn around.
Well it's it's a big problem at Bretton -- study from 2011 showed that people are paying on average 720 dollars a year for these alternative services that's a lot of money for folks the lower end of the economic spectrum.
-- lot of ways to get people involved a lot of cities have a thing called bank Don I'm in Philadelphia Philadelphia has a terrific bank on Philadelphia program.
-- -- -- with banks to create low cost low entry lower -- bank accounts you can get these people into -- simple product and demystify the entire banking system.
OK Jason -- thanks for coming on I was so surprised by this story thanks reckon it down to us thanks for having.
