How to survive if you live in a banking ‘desert’

Bank branches are drying up across the United States, leaving millions of Americans stranded.

In just five years, the number of brick-and-mortar branches nationwide dropped by 7%, a 2019 report by the Federal Reserve warned. With about 6,800 fewer branches to rely on, more and more people are now stuck in areas with few or no physical banks close by.

Many of these “bank deserts” are located in rural or low-income areas. Some U.S. residents have to travel more than 10 or even 30 miles to access traditional services. Others turn to banking alternatives that charge outrageous fees.

If you’re an unwilling desert dweller, you shouldn’t bury your head in the sand. You can access all kinds of banking services online if you know where to look, meaning you’re just a few steps away from solid ground.

1. Steer clear of false friends

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If you don’t have a bank account or a branch nearby, you may be turning in your paychecks at a check-cashing store. But depending on how much your local store charges, you could be coughing up a big chunk of your paycheck just to collect your own money. Fees range from 1% all the way up to 12%.

Most check-cashing stores also offer payday loans, another service targeted at people who can’t borrow from banks. These small, short-term loans have ridiculously steep fees of about $15 to $30 for every $100 you borrow. And that’s assuming you can pay them back on time to avoid getting buried in interest payments.

These places sell themselves as essential financial outposts for desert dwellers, but they’re never your only option.

Personal loans are flexible and simple to access over the internet, and some financial institutions will let you set up direct deposit for your paychecks without ever visiting a physical branch.

2. Use an online financial institution

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If you’ve got an account with a big bank but no branches in your area, you’re likely paying exorbitant fees every time you withdraw money from a random ATM — more than $7 per transaction in some cases.

By switching to an online financial institution, you may be able to put a stop to all the nickel-and-diming.

Not only will you be able to receive your paycheck through direct deposit, but also some online accounts will give you a debit card with unlimited free withdrawals from certain nonbank ATMs.

And since they don’t have to maintain hundreds of brick-and-mortar branches, most online financial institutions can afford to offer lower fees, more perks and better high-interest savings accounts than their big-bank competitors.

Aspiration, for example, operates on a pay-what-you-want fee system — even if it’s zero — and offers cash back on a debit card. Customers who upgrade to a premium account can earn up to 1% APY on their savings, which is way higher than what you can get at a typical bank.

3. Keep an eye on your credit score

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A scarcity of fair financial services can hurt desert dwellers in many ways, including their ability to maintain a solid credit score.

You need a long history of using different types of credit to build a good score in the first place. And if your score took a beating because you missed payments on a predatory payday loan, you may run into trouble getting a mortgage or a student loan in the future.

Thankfully, keeping tabs on your credit score is simple. A number of services will let you check your credit score for free online and send you an alert any time your score changes.

Many services also provide personalized advice on what you can do to boost your score as fast as possible.

Even if you move to an area that does have physical bank branches, a low credit score will follow you — so take care of it now and save yourself the pain down the road.

4. Let an app manage your payments

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The handicap to your credit score can make it harder for people in bank deserts to qualify for decent rates on credit cards.

And if you’ve got multiple credit cards with sky-high interest rates, keeping track of all your due dates and monthly minimums can be a challenge. One missed payment will cost you a bundle in fees and make it even harder to get a reasonable rate in the future.

If you want to save yourself some stress — and some money — you should consider using an app to handle your payments for you.

An app called Tally keeps track of your billing schedules, monthly minimums and interest rates and makes your payments on time, every time. You just make one monthly payment to the app’s account, and the app handles everything else.

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