[twblalock]

The article mentions that many people are unbanked because they fear overdraft fees, or have had to pay them before. This is a well known problem, and it drives people to use check cashing stores and debit cards like the one WalMart offers instead of banks.

[flukus]

They can't get debit cards from a bank? Even my mastercard is tied to a debit account.

Edit - from the comments below it sounds like the issue is caused by a fucked up banking system more than anything.

[protomyth]

They cannot get a bank account to get a debit card. Banks and a lot of credit unions have become problematic for low income folks.

[flukus]

Why is it hard to get a bank account? There is no risk to the bank from a low income person having an account, worst case for them is it's empty.

[rdl]

There is risk to the bank for bad-credit people having an account.

1) CSR interactions cost them way more than they'll ever make from the account, if the person stays poor forever

2) A lot of banking actions are not proper "transactions" or atomic in the CS sense -- you can end up overdrawing an account pretty easily. A genuinely poor person is eventually going to get charged off on this.

A lot of poor people fail chexsystems (bank account credit check, basically) from bounced checks, and thus can't open accounts. Which then limits their access to the banking system, including receiving funds, forcing them to use more expensive alternatives.

[protomyth]

https://mobile.nytimes.com/blogs/dealbook/2013/07/30/over-a-...

[sigstoat]

you can overdraft debit cards, and of the college students i've known over the years, that's the most common thing to overdraft.

and then find out about your overdraft (and the 17 following it) a week later when you get a letter in the mail.

[flukus]

> you can overdraft debit cards

Not always, my debit cards have always had the overdraft facility turned off. If there's no money in the account then the transaction doesn't go through.

[rdl]

It's possible to overdraft a debit card even if overdraft is not enabled on the account, due to how some merchants process some transactions.

[flukus]

That's a cost that should be worn by the merchant, if they aren't going to check that money is available in the account then that's their problem.

Is their anywhere else in the western world that has these problems? Or even the developing world?

[snuxoll]

The biggest places you used to see this were gas stations, they'd put a $10 hold on your account and then post the transaction for whatever you actually purchased - this two-phase process also exists at restaurants for tips.

The gas station issue has been mostly solved, debit networks now allow you to query the available balance on the linked account - I've been embarrassed once a few years ago when the pump only allowed me to put a couple dollars worth of gas in the tank because I had overdraft protection turned off (not an issue these days, I'm in much better financial health).

The issue with restaurants will eventually be solved when they are forced to switch to EMV and require you to put the tip in before the card is run, not writing it on the receipt. But who knows when they'll be forced to, the liability shift obviously hasn't bothered them much.

[toomuchtodo]

Unsure why this is so downvoted? Several banks support turning off the overdraft feature, which just causes debit transactions to be declined (or ACH items returned).

[aianus]

What about NSF fees? The NSF fee at my bank is 8x more than the overdraft fee ($40 vs $5 + 20% APR). Turning overdraft off would be a poor choice for me even if I anticipated the occasional overdraft.

[twblalock]

The problem is that those features don't always work if multiple pending transactions have been submitted, or if checks are used, transactions ordered a certain way (some banks have been in trouble for doing this in the past), etc.