Checking Out

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Fed up with having to keep a minimum balance in your checking account? Sick of banks slapping you with huge service fees every time you withdraw your money?

More than ever, dissatisfaction with bank services has turned people away from obtaining a checking account, according to the Federal Reserve Board's 1998 Survey of Consumer Finances (SCF).

The SCF, an extensive triennial survey of U.S. households' balance sheets and their use of financial services, found that distaste for bank bureaucracy is one of the leading reasons why 13.2 percent of households did not open a checking account in 1998.

The great majority of those households without checking accounts (82.6 percent) report incomes of less than $25,000, 61 percent of households are headed by individuals under the age of 45, and 57 percent are nonwhite or Hispanic.

But a low income isn't the leading factor chasing potential check writers away. In fact, only 12.9 percent of households without checking accounts say that "not enough money" is the sticking point, down from 20 percent in 1995, and 21.2 percent in 1989. And the percentage who said, "I do not write enough checks to make it worthwhile" dropped from 34.4 percent in 1989 to 28.4 percent in 1998.

On the other hand, the number of households without checking accounts who blame the absence on the fact that they "do not like dealing with banks" rose to 18.5 percent, up from 15 percent in 1989. Altogether, 19.6 percent of households in 1998 report that the minimum balance requirement or monthly service charge is too high. Only 16.3 percent gave those as reasons in 1989.

Consumers who previously had a checking account feel the most burned by rising bank costs. That group (47.9 percent of all households without checking accounts) are much more likely to report that fees were a deterrent and much less likely to report that they do not write enough checks, according to the study.

But all of the extra fees and hassles have yet to stop the vast majority of us from socking our money away in banks. The total number of non-checking households dropped 6 percentage points from 1989. And that shows that banks are getting a bad rap, says John Hall, a representative of the American Bankers Association. "It is really more of a perception problem, not a reality," he says. "There are accounts to serve everyone's needs. Many have little or no minimum balance [requirements] and low monthly fees of $3.00 to $5.00. They just need to ask."

For more information about the 1998 Survey of Consumer Finances, visit

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