One of the reasons why it is so difficult to get back on track while experiencing homelessness is that it is a seemingly never-ending vicious cycle. Tragically the obstacles faced by individuals experiencing homelessness are mostly unnecessary and preventable.
Banking requirements are one of myriad factors that perpetuate the cycle of homelessness. Making banking more accessible is an important step in helping to break the cycle.
Consider what you need to open a bank account:
Minimum opening deposit
Verifiable street address
Government identification (1–2 forms)
Sounds simple enough, right? If so, be grateful.
Opening deposit
A minimum opening deposit might be as low as $5, or as high as $100. It can be hard to accumulate that much cash if you do not have a safe place—such as a bank account!—to keep the money. Having a lot of cash may make you a target. Even if you are able to accumulate enough funds for the opening deposit, minimum balance requirements can be difficult to maintain without sufficient income, and monthly maintenance and other fees quickly add up. Some banks make opening an account even more difficult, requiring larger monthly minimums if the account holder does not have a regular source of income deposited into the account.
The easiest way to address this is to find an account with no opening deposit, minimum balance requirements, or monthly maintenance fees. Visiting a bunch of different banks is cumbersome, and there is no guarantee that you will be successful. Credit unions and local banks are generally more favorable than large national banks. However, access to credit unions and local banks varies by locale. Online banks often offer better options for no minimum deposit, but many of these banks still require other obstacles on this list.
Verifiable street address
Even if you can find a bank or credit union (whether a brick-and-mortar or online-only institution) that has a friendly rate structure, you must still meet other requirements. Having a verifiable street address is an obvious problem for someone experiencing homelessness. This can even prove difficult for digital nomads, folks choosing to live in sprinter vans, or individuals that frequently live or work abroad.
If the requirement was to simply list a street address, that would not be a problem. Folks could use a shelter address, or a physical location nearest to where they habitually live, like they might do when registering to vote. The problem is “verifiable.” To verify that you are connected to an address, banks typically ask for a lease or deed, utility service bill, bank statements, tax notices, employment letters, or even a driver license. Individuals without a permanent home will often find it difficult, if not impossible, to provide any of these documents.
I recently had a phone call with a representative from Live Oak Bank when trying to open a business savings account. (I refuse to link to them after the experience.) The topic of the call was address verification. At one point I asked, “What would someone experiencing homelessness do here? Would they simply not be able to bank with you?” Their response enraged me: “A homeless person is probably not worried about signing up for online banking.” Everyone deserves access to banking. A checking account is vital in this day and age. Homelessness does not negate that, nor does it give permission for others to treat our unhoused neighbors disrespectfully. Particularly in expensive locales, many individuals need to collect their money and make purchases before they are able to afford rent. Housing is expensive enough that employees receiving regular paychecks may opt to live in cars or offices.
The solution here is to provide bank accounts with more flexible address requirements. Banks have to meet certain legal requirements, but those requirements need to consider folks with less stable addresses. Allowing folks to list a post office box or a post office general delivery address instead of a street address would fix this problem. Another option is allowing banks to offer some type of restricted bank accounts; this would meet the legitimate government needs and potential risk factors that give rise to address requirements while providing banking options for more people.
The PO box solution has a very large caveat: PO boxes should be provided free of charge, without onerous paperwork, to individuals experiencing homelessness. Alternatively, all post offices could offer general delivery services, which are not available at all post office facilities. Ultimately, individuals should be able to reliably obtain mail at any post office of their choosing.
A common response is “just list a shelter address.” That is insufficient. It will not work for someone not living at a shelter. Even if a shelter address is available, verifying the address will be impossible if the bank asks for a utility bill as proof of address.
In theory, folks could use an address belonging to a friend or family member. Assuming that is even an option, verifying that address would still be problematic.
Postal banking would go a long way towards making banking more accessible to more people.
Government identification
Finally, the requirement to produce government identification—sometimes multiple forms—can be nearly insurmountable. For most folks, producing identification is easy. But that is not the case for everyone.
Need an identification card? Even when states offer them at no cost, there are still hoops to jump through. In the District of Columbia, for instance, individuals experiencing homelessness can obtain a no-cost non-driver identification card, but need to produce proof of identity, proof of Social Security number, and a Proof of Residency and No Fee Identification Card form (the latter of which can be obtained from a social services agency). In other words, a birth certificate, Social Security card (or a “No SSN” affidavit), and an agency-certified form.
The District of Columbia, and states following a similar approach, have the right idea, but folks are still presented with a paradox: They need to present a Social Security card and/or birth certificate to obtain identification, but they need identification to obtain a replacement Social Security card or a copy of their birth certificate. Even if someone has identification, acquiring a replacement Social Security card or birth certificate is no easy task.
There has to be a better way. Simply put, states and local governments need to make it less cumbersome to obtain identification documents and other vital records such as birth certificates.
Lessening the burden
Individuals experiencing homelessness face unique challenges that could be alleviated if government procedures were simply more flexible and accommodating. It should be easier for people to obtain the documents and services they need for daily life. The fact that a list of hindrances blocks individuals from opening a simple checking account to have a safe place to accumulate money prevents many individuals from taking the first step out of homelessness.
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