March 1, 2016

How to Survive Without a Bank Account

Simple. Thrifty. Living.

Conducting daily life without a bank account is becoming trickier as more and more transactions move online, but many people still find a way to successfully manage it. According to the FDIC, there are about 30 million U.S. households that are “unbanked” or “underbanked.” If you are one of these millions of cash-based consumers, here are a few tips to help you successfully navigate today’s digital marketplace.

If you haven’t yet acquired a prepaid credit card, you’ll find that they offer plentiful bank-like conveniences without the need for you to actually have a bank account. Prepaid cards don’t require credit checks, and they come with some of the same theft protections as standard Visa and MasterCards. These cards don’t actually extend you any credit, because you pre-load them with the amount of money you want to spend. Once you’ve given your deposit to the card issuer and received your card, you can use it as if it were a debit card. You can pay bills and make purchases online, and you can even arrange to have your paycheck deposited directly to your card account. Since these card issuers don’t make any money from interest, they do charge various types of fees. Before you choose a prepaid credit card, check the type and amount of fees that you will pay; some card issuers offer much better deals than others.

There are still a few situations in which people with bank accounts write checks. These mostly occur when you need to send money to a private individual, such as a landlord or relative. On such occasions, postal money orders work very well for someone without a bank account. You can buy them with cash at any post office, and if they are lost or stolen, you can recover your money by presenting the receipt to the postal service. Furthermore, the person receiving the money order doesn’t need to have a bank account either; they simply bring the money order with their ID to any post office, and that post office will pay them the cash value. (Smaller post office branches may not have enough funds available for these transactions, so for large money orders the recipient may need to go to an urban office. The limit for a single money order is $1,000.) Recipients with bank accounts can deposit or cash money orders exactly as if they were personal checks.

If you purchase postal money orders, make them out to yourself and keep the receipts in a different location, you can effectively create a zero-interest savings account. The money orders never lose their value, and if they are stolen, you can present the USPS with the receipts and get a refund of all your money.

Even if you don’t personally participate in digital banking services, you can benefit from the convenience of today’s technology. Many urban pharmacies and grocery stores now offer customers the chance to pay utility bills, top off prepaid cards and phones and send money to friends — all by using a remote cash-pay option. The store’s cashier has a smart scanner to read the bar code on your utility bill, phone bill or prepaid card and they accept cash in payment on the account. Your payment will be instantly posted via the retail store’s computer system, and you will receive a printed paper receipt to verify your transaction. Because you’re using cash and a bar code, you generally don‘t have to show ID or provide any sensitive personal information.

Whether you remain unbanked by choice or from necessity, you don’t have to feel like an outsider in the digital economy. With a few tools, you can streamline your transactions and conduct business in a standard, stress-free manner.

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