“Unbanked” and “underbanked” bank products: be careful

There are an estimated 9 million Americans who do not have traditional bank accounts and another 21 million that are “underbanked,” and many banks are now developing products to get more business from these people.  One reason for this is that these products were not covered in new financial regulations, so the banks can use high fees, hidden fees and high interest rates, to maximize their return.

The main things to watch out for are:

High fees on prepaid credit cards. These can include fees for everything from a fee to activate the card, to a charge every time you load money on it. and even a fee to call customer service.

Fees and high interest on loans like payday loans.  Some banks are now offering loans you pay back from your next check.  Interest rates on these loans can run to 300% when you include fees.

If you need these products you may have no choice, but try to make sure that you check your alternatives.  Do not assume your bank will offer the best deal.

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