Foundation Concepts:

1. By some reports, up to 1/6th of the country is unbanked.  Persons without bank accounts are living outside the financial mainstream may have limited opportunities because they do not have a relationship with a traditional financial institution.  The challenge is that there are a number of good reasons why some people do not have bank accounts (i.e. their wages will be garnished, their access to a mainstream bank is limited, the costs of doing business in a traditional financial institution may be higher), but having a checking and savings account is a fundamental step on the road to asset building.
   
   
2. Banks are not really all that interested in providing bank accounts for persons with low balances and a moderate number of transactions – that is to say, there is no money to be made from the person who is living from paycheck to paycheck.  Consequently, fee structures are complicated and often costly.  Credit unions can provide a less costly alternative, however, what customers may save in transaction costs, may be offset by the fact that the credit union likely has only a handful of locations, at best, which is very inconvenient and may lead to the use of other banks ATMs at a significant cost to the account holder.
   
   
3. All banks are required to provide low cost Basic Accounts, that allow account holders to make a limited number of deposits and withdrawals each month for a modest fee. 
   
   
4. Any use of a checking account requires the account holder to be responsible for managing the account – i.e. making sure that they keep track of their expenditures and do not overdraw their account.  Banks made $38 billion in overdraft protection fees last year, a direct transfer of wealth from those who are barely making ends meet to the financial sector.
   
   
5. One of the most significant advantages of a bank account is that it provides a record of where your money went.  Without this type of data, it is impossible to budget, save and build wealth.

Discussion Questions:

What are some of the benefits of having a bank account that were discussed:

• Safety of not carrying cash
• Record of Payments
• Cost Savings vs fringe financial service providers like check cashers
• Choice of payment methods – check, cash, debit card
• Opportunity for Direct Deposit
• Accounts are insured up to $250,000

Do you tend to spend more money when you have cash in your pocket than when you do not?  How can having a bank account help to curtail your spending?

Have you ever paid for something with a money order that got lost?  How difficult was it to prove that you have paid?  How can having a bank account help you to keep better records of your financial transactions and why is that important?

What is the purpose of a bank account?  Is it just a place to store your “extra” money or is it a financial management tool that can help you to budget, save and plan for the future?  How? 

Can you think of any other advantages to having a “relationship” with a bank?  Where would you go if you needed a car loan?  What about a credit card?