Looks like Southerners are more likely to stash their cash under the mattress, y’all.
In a study released Wednesday by the Pew Charitable Trust, the organisation found that folks living south of the Mason-Dixon Line were least likely to own a checking account.
The study, which took a year to complete, gathered state-by-state data on the costs incurred by consumers who do business with the 10 largest banks in the U.S. and calculated how many citizens had dropped bank accounts altogether.
Mississippi topped the list with 16.4 per cent of its population eschewing traditional banking. neighbours like Georgia (12.2 per cent) and Kentucky (11.9 per cent) weren’t far behind.
New England boasted the states with the highest percentage of banking citizens, as more than 97 per cent of New Hampshire, Vermont and Maine households bank.
But the same couldn’t be said for New York, where 9.8 per cent of residents don’t hold checking accounts. Still, that’s higher than the national average for the unbanked, which the FDIC holds at 10 per cent.
All of this begs the question why anyone would not want to open a secure, federally-insured checking account.
Here are some possibilities:
Income. In a 2009 survey conducted by the FDIC, more than a third of respondents said they didn’t own a checking account because they simply thought they didn’t have enough cash to justify one. Families that earned less than $30,000 annually made up more than 70 per cent of unbanked households.
Pesky fees. The average monthly fee to bank in states like Mississippi and Alabama is $10, well over the national average of $8.95, according to Pew’s study. Not to mention the fact that banks are starting to tack on fees for debit card transactions.
On the other hand, Montana and Wyoming charge two bucks less for overdraft fees than the national average ($35). That might explain why less than 4 per cent of each states’ households are unbanked.
Who uses checks? Nearly 18 per cent of respondents to the FDIC study said they didn’t write enough checks to make a bank account worth their while.
Minimum balance. More than 200,000 Alabama residents don’t bank and that could be because the state’s banks require an average of $5,000 minimum balance to wave monthly fees, according to Pew’s findings. That’s twice the national average.
Other options. The FDIC found two-thirds of unbanked households were perfectly fine using alternative means to track their funds. They opted to use money orders, payday loans and (say what?) pawn shops. About 12 per cent said they used prepaid credit cards.