The Price of Being Unbanked or Un­der­banked in NYC

For all the banks you see around New York City, a startling number of residents aren't using them.  According to a new report commissioned by the Department of Consumer Affairs, over 11 percent of households in the city are unbanked, meaning they have no bank account whatsoever.  Another one in four are underbanked, compared to 1 in 5 nationally.

"An underbanked individual has a bank account, but a bank account that is not serving all of their financial needs - so they're still using fringe services, whether it's check cashing services, money orders, pre-paid debit cards," says Consumer Affairs Commissioner Julie Menin.

And that, she says, definitely costs them.

"An average $600 dollars a year in check cashing services. There is no reason for that," Menin says.

Not only is being unbanked expensive, it is dangerous as well.

"People who don't have any bank account, they're keeping cash at home. That's never safe to do," Menin says.

In addition, she says if you do not have a bank account, you probably have no savings or an emergency fund, which could leave you in financial jeopardy.

The DCA has also put together an interactive graph detailing the number of unbanked and underbanked households in each neighborhood. It can be found here.

One of the reasons people may shy away from the traditional banking system is a concern about being hit with hidden fees or overdraft charges.  To that end, the Department of Consumer Affairs has partnered with financial institutions around the city to offer a simple, more transparent account.

"One of the products that we offer is a SafeStart bank account that has no upfront fees, no overdraft fees and a minimum balance of 25$ or less," Menin says.

The account is available at 19 branches across the five boroughs, including the Lower East Side People's Federal Credit Union. 
In addition, Menin says some of those institutions are now accepting IDNYC cards to open an account, which eliminates another common hurdle to the banking system, especially for immigrants.

"Being asked for documentation.  They might not have a social security number and they were being asked for that," Menin says.

The department runs 30 financial empowerment centers around the city.  To find one, or to learn about the NYC SafeStart Account, visit nyc.gov/consumers.