Grasp The Art Of Payday Loans Near Me 550 With These three Ideas

Language Barriers in Banking

The costs of not having a bank account

Banks: Overcoming language barriers

What does it mean to be underbanked or unbanked?

What percentage of people living in United States are unbanked?

What are the problems that language barriers in banking cause?

Does the bank have translators?

The Bottom Line

Personal Finance Banking

Banks: Overcoming language barriers

Language barriers make it difficult for some to be able to access banking services

By Rebecca Lake

Published December 02, 2022

Confirmed by Suzanne Kvilhaug

In the United States, language barriers hinder non-English-speaking customers to gain access to banking services, so the process of paying bills and saving can be more challenging.

About one in 12 people in the U.S. speak limited English, and many are unbanked.1 In the present there are steps being taken by the Consumer Financial Protection Bureau (CFPB) and community banks are working to reduce the language gap to ensure that more people get the access to banking services that they require.

Let’s look at the impact of the language barrier in banking and how they can be dealt with.

The most important takeaways

People who have limited English on the United States may not have easy access to banking services they need.

A total of 4.5 percent of the U.S. population is unbanked which means they don’t have bank accounts or use traditional banking products or services.2

Hispanic households account for 12.2 percent of the unbanked population.

Language issues can make it hard for non-native English speakers to get access to banking services. This can make paying bills as well as saving cash more challenging.

Initiatives of the Consumer Financial Protection Bureau (CFPB) and community banks are helping reduce the gap in language.

Language Barriers in Banking

The language barrier can affect the ability of people to access financial services. A little over 5% of the population in the U.S. were unbanked, or did not have a bank account, in 2020.3 But the rate for communities where English is not the primary spoken language is more. For instance, among Hispanic households, in which Spanish is usually the predominant langue, 12.2% are unbanked, according to the 2019 Federal Deposit Insurance Corp. (FDIC) data.4

A whopping 22 percent from the U.S. population speaks a language other than English at home–that’s 67.3 million people.5 A majority of them are proficient in English However, a lot of them aren’t. Over one-in-12 people over the age 5 are in the range of being limited English proficient (LEP), meaning that they are able to speak English not very well.1

Communities and individuals who aren’t proficient in English might have trouble to gain access to banking services in the U.S. Even if banks offer basic account information and customer services in a range of languages, financial disclosures and written documents might not be available in languages other that English. Additionally, foreigners may have difficulty understanding how bank accounts, investments and other financial products operate in the U.S.1

The Consumer Financial Protection Bureau (CFPB) provides numerous online tools to assist Spanish speakers learn more about U.S. banking concepts, products, and services.

The costs of not having a bank account

It could be expensive to have a language barrier leave you unbanked or underbanked. This means you have a bank account , but also use other financial services.

The people who aren’t served by mainstream banks often use more costly financial services. For instance, cashing check services could charge fees that range from 1% to 12% of the check amount.6 It could cost you between $10 and $120 to cash an amount of $1,000. Banks may cash checks for noncustomers, but this can still entail paying a fee of $5 to $10. For people who get payed by check since they do not have a bank account, these charges can add up to thousands of dollars each year.

It can also be expensive if you rely on alternative financial services. Options such as payday loans or car title loans offer significantly higher rates of interest than conventional personal loans. Payday loans typically have APRs (APRs) at 300% and higher could create an unsustainable cycle of debt that is difficult to escape.7

Each state has different laws regarding payday lending, including what interest rates and fees may be charged by lenders. Certain payday loans are considered predatory and are regulated in specific states.8

Overcoming Language Barriers in Banking

In recent years there has been rising awareness of the effect of language barriers to access to banking and financial health. Both financial services companies and federal agencies are working to address this problem.

For example, Mitchell Bank in Milwaukee is one of the banks that are opening branches in underserved areas. The bank has a branch named Cardinal Bank in a Milwaukee high school with a 70% Hispanic immigrant population.9 Cardinal Bank offers financial literacy classes, which help customers who do not have Social Security numbers to apply to apply for Internal Revenue Service (IRS) Individual Taxpayer Identification Numbers (ITINs) and utilizes an FDIC Program Money Smart to teach the financial literacy of students and their parents.63

Individuals with little or no English proficiency can also look to government programs to help with banking services. Numerous states and major cities have local advocacy for immigrants organizations that can direct people to local banks offering services, education, and outreach in other languages.

Additionally, The Consumer Financial Protection Bureau (CFPB) can provide assistance for those who have limited English proficiency. Call (855) 411-2372 for support in more than 180 languages. The CFPB also provides educational materials on banking in a variety of languages.10

Note

In addition to dealing with difficulties with language banks and financial institutions are taking steps to make banking accessible for people with speech or hearing disabilities or cognitive impairments, as well as visual impairments.

What is it to be unbanked or underbanked?

Being unbanked implies that you do not have a bank account. Underbanked means the fact that you do have a financial institution accounts, however, you are also using alternative financial products, such as check cashing services as well as payday loans.

What percentage of people living in United States are unbanked?

Approximately 5percent out of U.S. population, or 7.1 million households, were unbanked in May 2021. The number of unbanked households was disproportionately higher among Hispanic, Black, and low-income families.3

What are the problems that language barriers in banking cause?

Language barriers can make those who have limited English ability (LEP) more hesitant to look for banking and financial services. This could make it harder for them to manage their finances, pay off bills and save money. Additionally, they are more likely to utilize costly banking alternatives, like check cashing services as well as payday loans.

Does the bank have translators?

Banks are able to use automated tools for interpretation and translation to communicate with customers who have limited English proficiency. The banks are now hiring interpreters and translators who can communicate with customers on the telephone or face-to-face.

The Bottom Line

Language obstacles can make it difficult for those with limited English to obtain the banking services or products that they need, but steps are being taken to tackle this issue across the U.S. As the banking industry becomes more inclusive individuals with less English proficiency might be able to open bank accounts or apply for loans, and manage their finances without having to pay excessive fees.

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