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Minorities Sidestep Banks: What Are We Afraid of?

by Minority Fortune

Whilst minorities work within the systems of society, they largely remain distrustful of them. While they go to work and earn paychecks, only a portion of those will deposit their checks with a banking system. USA Today revealed an alarming statistic that 53% of African American homes and 43 % of Hispanic homes resort to alternative financing services like check cashers, advance loans, etc. This shows that there lies a lack of trust and information about banking.

Possible Causes

Bureaucracy is one reason minorities avoid banking institutions. The idea of having a set of rules implied to their cash seems unnecessary. Why fill out loads of paperwork to apply for loans when you could fill out a quick form at an advance loan place? Why allow your check to sit in a bank days before you can use it when you could just get it cashed at a check cashing place?

Another factor is alienation from banking institutions. USA Today reports that about 20% of American households earning under $30,000 income don’t use banks. However, low-income earning families and minorities face rejection the most from banks when they need them the most. They get charged the highest interest rates and are scrutinized the harshest for loans. That’s if they even get approved for the loans.

These households are avoiding banks because they don’t see how banking can enhance their finances. The negative headlines about banking institutions nearing bankruptcy and needing bailout funds don’t help the matter. There’s a lack of understanding how to make banking work for their money. Until these households are shown the benefits, they will continue to avoid using them.

Bank of Mattress

If the money isn’t with banking institutions, then that means that it remains stored in the households. A subset of the non-banking culture uses their mattress to keep their money. The idea of the money being tangible and close by is comforting.

Occasionally, hip hop artists will reference storing their money in mattresses. In a song titles “I’m so Paid” Jeezy references it by stating:

I’m so paid ya kno I keep a pocketful
And that’s before the taxes
Took my whole gross net and hid it under my mattress

Paranoia leads some individuals to hide their assets under mattresses due to illegal activities. The money may have been earned in a black market. Thus, to keep their earnings on the low, they stow away their funds in their homes. This makes the money harder to access and harder to freeze should the law enforcement crack down on their activities.


Banking institutions must appease low-income earning families. If they want to earn their business, they need to become more active in the communities. Trust is a two-way street. If they expect these households to trust in banks, they too must have trust in their clients. Furthermore, they need to help minority clients more when they seek out banking institutions for financial help.

Minority households must make their money work for them more. It doesn’t work for us sitting in the homes. It doesn’t work for us by paying high interest fees imposed by check cashing, advance loans, and pawning fees. We must seek out the banks that align with our goals and get educated on savings and investments.

*Image courtesy of Andersen Ross.
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