Online banking is convenient, but it has limitations. Sure, physically going to the bank may not be your favorite errand, but you should have the option to visit a real building and talk to a real person when you need it. But what if you don’t have access to a physical bank in your area? That means you’re in what’s called a “banking desert.”
What is a banking desert?
A “banking desert” refers to a geographical area where there is a significant lack of access to traditional banking services and financial institutions. In these areas, individuals and communities often face challenges in accessing basic financial products and services, such as checking and savings accounts, loans, and credit.
In an economy that assumes you have full access to traditional banking, living without bank access is not only inconvenient, but downright unaffordable. All the costs of being unable to conveniently cash checks, establish deposit accounts, and secure loans adds up. Here’s what to understand about banking deserts and what you can do if you live in one.
Why are there no banks in your area?
There are several factors that contribute to the emergence of banking deserts:
Geographical location: Some rural or remote areas might have limited access to financial institutions due to their distance from urban centers where banks are more commonly located.
Low-income communities: Banking institutions may be less inclined to set up branches in low-income neighborhoods due to concerns about profitability and higher perceived risks.
Lack of infrastructure: Areas with limited infrastructure and transportation options may have fewer banks or ATMs available to residents.
Bank branch closures: Economic factors can lead to the closure of bank branches, particularly in areas where customer traffic is lower. This can leave residents with fewer options for accessing banking services.
Digital divide: As banking services become increasingly digital, communities without reliable internet access or technological literacy may struggle to utilize online banking options.
What to do if you don’t have access to a bank
If you or someone you know lives in a banking desert, there are several steps you can take to address your financial needs:
Research alternatives: Look for credit unions, community development financial institutions (CDFIs), or local cooperatives that might provide banking services in your area.
Online and mobile banking: Explore online and mobile banking options offered by traditional banks. These can help bridge the gap if there are no physical branches nearby. Plus, online-only banks offer competitive interest rates and fee structures. Look into reputable online banks that offer the services you need.
Use mobile payment apps: Without bank access, you could be forced to pay high fees for everyday financial services like check cashing and money orders. Mobile payment apps like PayPal, Venmo, and Cash App can help you manage transactions without relying solely on traditional banking services.
Remember that while banking deserts present challenges, there are often alternatives available to help you manage your finances. It’s important to do thorough research and make informed decisions based on your individual needs and circumstances.
