For Julia Cano, cash is king.
The 25-year-old Southold resident doesn’t have an account with a bank or credit union, so most transactions are cash exchanges: her earnings from cleaning homes, paying the monthly rent, shopping for groceries.
Cano, who speaks Spanish, has not opened an account because she worries about being unable to communicate with bank employees. Yet she remains concerned about losing money or having it stolen.
“It’s better to have the money in an account,” she said through a Spanish interpreter.
Thousands of people in New York are in the same predicament in which they depend on cash, check cashing or other means outside of an account with a bank or credit union to manage their finances. But handling money this way can impede financial stability — making it expensive to access funds in the short term and potentially more challenging to secure credit and housing later on.
“A bank account is fundamental to being able to participate in and benefit from the U.S. economy,” Keith Ernst of the Federal Deposit Insurance Corp. said in a podcast.
Yet in New York, roughly 5% of residents were unbanked in 2023, meaning they lived in homes where no person had a checking or savings account at a financial institution like a bank, the FDIC said in a report released in November. Another 15.4% of households in New York — roughly 8,160 — were underbanked. Those people have an account but utilized one of several nonbank financial services like money orders and cash checking in the last 12 months, the agency said.
Nationally, the unbanked rate was 4.2% in 2023, down from 4.5% in 2021, according to the FDIC. The change wasn’t statistically significant, but it was far down from the 8.2% unbanked rate in 2011.
A lack of bank accounts often costs low-income people, the FDIC said. Unbanked people are more likely to turn to pawn shop loans, money orders or check cashing services, which have fees. Moreover, the money can be stolen without recourse, whereas deposits in FDIC-insured banks are covered up to $250,000.
Nationwide, nearly 78% of unbanked people don’t have mainstream credit, like a credit card, student loan or auto loan, the FDIC said in the report. Without mainstream credit, a person probably doesn’t have a credit score, which is often used to vet applicants for a rental or job opportunity.
People remain unbanked for a variety of reasons. For some, it’s the absence of neighborhood bank branches or problems with account histories, according to the FDIC’s survey of roughly 30,000 households.
Some of the most common reasons people in the report cited for not having a bank account were a lack of trust in banks, not having the minimum balance and fear of fees. About 42% of people without a bank account didn’t have “enough money to meet minimum balance requirements,” the survey said, and about 30% of respondents who were very interested in an account said high bank fees was a reason they remained unbanked.
For years, banks have charged what some consumer finance experts call “junk fees.” Those fees for overdraft and inactive accounts can pile up and leave account holders in the red, experts say.
The Consumer Financial Protection Bureau is seeking to curb the use of overdrafts among big banks and credit unions — those with revenues that exceed $10 billion — with tighter restrictions. The move would allow banks to charge overdraft fees topped at $5, the watchdog agency said. They could also “cap their fee at an amount that covers costs and losses” or “disclose the terms of their overdraft loan just like other loans.”
The regulation could save households that pay overdraft fees around $220 a year and is expected to be in place by October, the agency said.
The Center for Advocacy, Support and Transformation, a nonprofit that primarily serves the North Fork and Shelter Island, hosts workshops that include financial education. Some of those who come are unbanked or underbanked, said Erica Steindl, the interim executive director of CAST.
Of the people CAST serves, Steindl said language barriers are key to many foregoing a bank account. She also noted that banking might not be standard in their native country, or they might not be able to maintain a minimum balance.
Still, she said those who come to CAST without a bank account face difficulties processing and receiving payments, which also causes them to struggle to get housing in a very competitive market.
“When people can’t produce a personal check, that becomes an issue — another reason … not to rent,” she said.
Today, there are several bank branches in Wyandanch, including a Flagstar Bank built with the state’s Banking Development District program, which seeks to open bank branches in underserved communities in New York. The state gives banks and credit unions that build these branches advantages like $10 million in public deposits, according to the state’s website.
But for years, the community had limited banking services, said former Assemb. Kimberly Jean-Pierre, whose district included part of Wyandanch. A bank in the community might have an ATM service but not a representative who could speak with a community member about other financial services, such as getting a mortgage or small business loan.
Jean-Pierre, who sat on the state Assembly’s banking committee, believes inadequate banking in a community and financial education helps to perpetuate high foreclosure rates in many communities of color.
“Not having access to a bank is detrimental to a growth of any community, the growth of any family,” she said.
Currently, the state’s Banking Development District has helped build about 20 banks in New York, though Jean-Pierre believes there could be more on the Island and elsewhere. Another bank the district helped build on Long Island is a Flagstar Bank branch in Brentwood.
“They still need access to a banker. They still need access to … understand how to invest money, how to refinance and how to deal with their mortgage,” she said.
There are initiatives to help more people become part of the mainstream banking system.
Bank On is a partnership between banks, credit unions, FDIC and other community groups to create a certified account through the program. The accounts have standards that include debit card access and a $25 minimum or less to open an account, according to the initiative. There are also no fees for low balances, inactivity or overdrafts.
Today, nearly 500 financial institutions take part in providing upward of 11 million Bank On accounts nationally as of the end of 2023, according to the Federal Reserve Bank of St. Louis and the initiative.
David Rothstein, senior principal with the Cities for Financial Empowerment Fund, the nonprofit that helped start the initiative, said continuing to reduce the number of unbanked people means getting to the hardest-to-reach families. Many of them are new Americans, have low incomes, are domestic violence survivors or are aging out of foster care, he said.
Rothstein said the initiative works to reach those people through nonprofits, mayors and other entities. He said there needs to be more structural changes, like offering that unemployment assistance be deposited in a Bank On account versus a check.
“Those are the kinds of large-scale pushes and changes that are going to be needed … if our end goal is to get to zero,” he said.
In Southold, the CAST nonprofit hosted a resource fair in January on topics such as immigration, housing and financial literacy. Bank of America representatives spoke in English and Spanish with a few dozen people, explaining how to open an account, avoid fees and other financial planning information.
Cesar Morales, 73, was among the crowd. He has a bank account, but he last used it about three months ago, he said in January.
Morales worries that putting away money in an account could mean he might lose it if he should have to leave the country. He also has technological issues when he tries the debit card. So, instead, he deals in cash.
“It’s easier for me,” he said through a Spanish translator.
Correction: Julia Cano is a Southold resident who doesn’t have an account with a bank or a credit union. An earlier version of this story misspelled her name.
For Julia Cano, cash is king.
The 25-year-old Southold resident doesn’t have an account with a bank or credit union, so most transactions are cash exchanges: her earnings from cleaning homes, paying the monthly rent, shopping for groceries.
Cano, who speaks Spanish, has not opened an account because she worries about being unable to communicate with bank employees. Yet she remains concerned about losing money or having it stolen.
“It’s better to have the money in an account,” she said through a Spanish interpreter.
WHAT NEWSDAY FOUND
- In New York, roughly 5% of residents were unbanked in 2023, meaning they lived in a home where no person had access to a checking or savings account with a financial institution like a bank, a FDIC report said.
- The most common reasons people do not have a bank account are that they don’t trust banks, they don’t have the minimum balance and they fear fees.
- There are initiatives to help more people become part of the mainstream banking system, including accounts that don’t have fees for overdraft or a low balance.
Julia Cano, 25, and her son Benjamin, 4, of Southold attend a community workshop at CAST (Center for Advocacy Support Transformation) in Southold on Tuesday, with a presentation by Bank of America, which discussed opening a bank account and cyber security. Credit: Randee Daddona
Thousands of people in New York are in the same predicament in which they depend on cash, check cashing or other means outside of an account with a bank or credit union to manage their finances. But handling money this way can impede financial stability — making it expensive to access funds in the short term and potentially more challenging to secure credit and housing later on.
“A bank account is fundamental to being able to participate in and benefit from the U.S. economy,” Keith Ernst of the Federal Deposit Insurance Corp. said in a podcast.
Yet in New York, roughly 5% of residents were unbanked in 2023, meaning they lived in homes where no person had a checking or savings account at a financial institution like a bank, the FDIC said in a report released in November. Another 15.4% of households in New York — roughly 8,160 — were underbanked. Those people have an account but utilized one of several nonbank financial services like money orders and cash checking in the last 12 months, the agency said.
Nationally, the unbanked rate was 4.2% in 2023, down from 4.5% in 2021, according to the FDIC. The change wasn’t statistically significant, but it was far down from the 8.2% unbanked rate in 2011.
A lack of bank accounts often costs low-income people, the FDIC said. Unbanked people are more likely to turn to pawn shop loans, money orders or check cashing services, which have fees. Moreover, the money can be stolen without recourse, whereas deposits in FDIC-insured banks are covered up to $250,000.
Nationwide, nearly 78% of unbanked people don’t have mainstream credit, like a credit card, student loan or auto loan, the FDIC said in the report. Without mainstream credit, a person probably doesn’t have a credit score, which is often used to vet applicants for a rental or job opportunity.
People remain unbanked for a variety of reasons. For some, it’s the absence of neighborhood bank branches or problems with account histories, according to the FDIC’s survey of roughly 30,000 households.
Some of the most common reasons people in the report cited for not having a bank account were a lack of trust in banks, not having the minimum balance and fear of fees. About 42% of people without a bank account didn’t have “enough money to meet minimum balance requirements,” the survey said, and about 30% of respondents who were very interested in an account said high bank fees was a reason they remained unbanked.
Fees that pile up
For years, banks have charged what some consumer finance experts call “junk fees.” Those fees for overdraft and inactive accounts can pile up and leave account holders in the red, experts say.
The Consumer Financial Protection Bureau is seeking to curb the use of overdrafts among big banks and credit unions — those with revenues that exceed $10 billion — with tighter restrictions. The move would allow banks to charge overdraft fees topped at $5, the watchdog agency said. They could also “cap their fee at an amount that covers costs and losses” or “disclose the terms of their overdraft loan just like other loans.”
The regulation could save households that pay overdraft fees around $220 a year and is expected to be in place by October, the agency said.
The Center for Advocacy, Support and Transformation, a nonprofit that primarily serves the North Fork and Shelter Island, hosts workshops that include financial education. Some of those who come are unbanked or underbanked, said Erica Steindl, the interim executive director of CAST.
Of the people CAST serves, Steindl said language barriers are key to many foregoing a bank account. She also noted that banking might not be standard in their native country, or they might not be able to maintain a minimum balance.
Still, she said those who come to CAST without a bank account face difficulties processing and receiving payments, which also causes them to struggle to get housing in a very competitive market.
“When people can’t produce a personal check, that becomes an issue — another reason … not to rent,” she said.
Improving access to banking
Today, there are several bank branches in Wyandanch, including a Flagstar Bank built with the state’s Banking Development District program, which seeks to open bank branches in underserved communities in New York. The state gives banks and credit unions that build these branches advantages like $10 million in public deposits, according to the state’s website.
But for years, the community had limited banking services, said former Assemb. Kimberly Jean-Pierre, whose district included part of Wyandanch. A bank in the community might have an ATM service but not a representative who could speak with a community member about other financial services, such as getting a mortgage or small business loan.
Jean-Pierre, who sat on the state Assembly’s banking committee, believes inadequate banking in a community and financial education helps to perpetuate high foreclosure rates in many communities of color.
“Not having access to a bank is detrimental to a growth of any community, the growth of any family,” she said.
Currently, the state’s Banking Development District has helped build about 20 banks in New York, though Jean-Pierre believes there could be more on the Island and elsewhere. Another bank the district helped build on Long Island is a Flagstar Bank branch in Brentwood.
“They still need access to a banker. They still need access to … understand how to invest money, how to refinance and how to deal with their mortgage,” she said.
Reaching the unbanked
There are initiatives to help more people become part of the mainstream banking system.
Bank On is a partnership between banks, credit unions, FDIC and other community groups to create a certified account through the program. The accounts have standards that include debit card access and a $25 minimum or less to open an account, according to the initiative. There are also no fees for low balances, inactivity or overdrafts.
Today, nearly 500 financial institutions take part in providing upward of 11 million Bank On accounts nationally as of the end of 2023, according to the Federal Reserve Bank of St. Louis and the initiative.
David Rothstein, senior principal with the Cities for Financial Empowerment Fund, the nonprofit that helped start the initiative, said continuing to reduce the number of unbanked people means getting to the hardest-to-reach families. Many of them are new Americans, have low incomes, are domestic violence survivors or are aging out of foster care, he said.
Rothstein said the initiative works to reach those people through nonprofits, mayors and other entities. He said there needs to be more structural changes, like offering that unemployment assistance be deposited in a Bank On account versus a check.
“Those are the kinds of large-scale pushes and changes that are going to be needed … if our end goal is to get to zero,” he said.
In Southold, the CAST nonprofit hosted a resource fair in January on topics such as immigration, housing and financial literacy. Bank of America representatives spoke in English and Spanish with a few dozen people, explaining how to open an account, avoid fees and other financial planning information.
Cesar Morales, 73, was among the crowd. He has a bank account, but he last used it about three months ago, he said in January.
Morales worries that putting away money in an account could mean he might lose it if he should have to leave the country. He also has technological issues when he tries the debit card. So, instead, he deals in cash.
“It’s easier for me,” he said through a Spanish translator.
Correction: Julia Cano is a Southold resident who doesn’t have an account with a bank or a credit union. An earlier version of this story misspelled her name.
Education: Howard University
Tiffany Cusaac-Smith came to Newsday in 2023 after being a race and history reporter at USA TODAY, where she wrote enterprise and spot articles examining how the past shapes the present. Previously, she worked as the race and justice reporter at the USA TODAY Network of New York, covering issues such as criminal justice reform, housing, environmental justice, health care and politics. At The Journal News/lohud.com in Westchester County, she covered Yonkers, the state’s third-largest city. She also worked at The Associated Press in Atlanta.
Honors and Awards: Criminal justice reporting fellowship with the National Press Foundation; New York News Publishers Association award for distinguished investigative reporting; Contributed reporting for Best of Gannett honor; Member of Table Stakes, a program funded by the Knight-Lenfest Local News Transformation Fund and managed by the American Press Institute to transform local news.