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작성자 Helena Hudd 작성일23-02-08 03:53 조회3회 댓글0건


Language Barriers in Banking
The costs of not having a bank account
Overcoming Language Barriers in Banking
What is it being unbanked or underbanked?
What percentage of people living in United States are unbanked?
What issues do bank language barriers cause?
Are banks equipped with translators?
The Bottom Line

Personal Finance Banking

Overcoming Language Barriers in Banking

Language barriers make it hard for some people to be able to access banking services
By Rebecca Lake
This article was published on December 02, 2022.
Fact checked by Suzanne Kvilhaug

In the United States, language barriers could hinder non-English-speaking people to use banking services. Therefore, the process of paying bills and saving is more difficult.

About one in 12 residents within the U.S. speak limited English, and many are unbanked.1 However, today banks like the Consumer Financial Protection Bureau (CFPB) and community banks are making efforts to bridge the gap in language to help more people have access to the banking services they need.

Let's look at the impact of the language barrier in banking and how they can be taken care of.
The most important takeaways

People who aren't fluent in English within the United States may not have easy access to banking services they require.
An estimated 4.5% of the U.S. population is unbanked, meaning that they don't have bank accounts or have access to traditional banking products or services.2
Hispanic households account for 12.2 percent of the bank-inactive people.
Language barriers can make it difficult for non-native English users to gain access to banking services. This can make paying bills and saving money more difficult.
Initiatives of organizations like the Consumer Financial Protection Bureau (CFPB) and community banks are helping bridge the language gap.

Language barriers in banking

The language barrier can affect the accessibility of financial services for people. Around 5% of people within the U.S. were unbanked, or had no bank account, in 2020.3 However, the proportion of communities that are where English is not the first language is much more. For instance, in Hispanic households, in which Spanish is often the primary langue, 12.2 per cent aren't banked according to the 2019 Federal Deposit Insurance Corp. (FDIC) data.4

Nearly 22% of the U.S. population speaks a language other than English at home - that's 67.3 million people.5 A majority of them are fluent in English, but many aren't. Over one-in-12 people older than 5 are restricted English proficient (LEP) this means they can speak English less than well.1

People and communities not proficient in English can find it difficult to access banking services in the U.S. Even if banks provide basic account information or customer services in a range of languages financial disclosures and written documents may not be available in languages other than English. Furthermore, newcomers might 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 help Spanish users to better comprehend U.S. banking concepts, products, and services.
The Costs of Being Unbanked

It is costly to have a language barrier make you bankless or underbanked. This means you have a bank account but you also have other financial services.

People who aren't well serviced by banks that are mainstream typically use more costly financial services. For instance, cashing check services can charge fees ranging between 1% and 12% on the total check amount.6 It could cost you $10 to $120 to cash a $1,000 check. Banks are able to cash checks for noncustomers, however, this could mean paying a fee of $5 to $10. For people who get the check due to the fact that they don't have a bank account, these fees can amount to thousands of dollars each year.

It can also be expensive if you rely on alternative banking services. Options such as payday loans or car title loans are significantly higher in rates of interest than traditional personal loans. Payday loans typically have an annual percentage rate (APRs) at 300% and more could create the cycle of debt that's difficult to escape.7

Each state has different laws regarding payday lending and the interest rates and fees may be charged by lenders. Certain payday loans are considered predatory and are not permitted in some states.8
Overcoming Language Barriers in Banking

In recent times there has been a increasing awareness of the effects of language barriers on access to banking and financial health. Both financial service companies and federal agencies are trying to tackle this issue.

For instance, Mitchell Bank in Milwaukee is among the banks which are opening branches in the areas of low-service. The bank has a branch named Cardinal Bank in a Milwaukee high school, which has a 70% Hispanic immigrant population.9 Cardinal Bank offers financial literacy classes, which help customers with no Social Security numbers apply to apply for Internal Revenue Service (IRS) Individual Taxpayer Identification Numbers (ITINs), and uses an FDIC money smart program in order to teach the financial literacy of students and their parents.63

Individuals with restricted English proficiency are able to look to government programs for help with banking services. A lot of states and cities have local immigrant advocacy organizations that can direct people to local banks that offer services, education, and outreach in other languages.

In addition, The Consumer Financial Protection Bureau (CFPB) offers support for people with limited English proficiency. Contact (855) 411-2372 for assistance in more than 180 different languages. The CFPB also provides educational materials on banking in dozens of languages.10

In addition to the need to address difficulties with language, the financial and banking institutions too are taking measures to make banking accessible for people with hearing and speech disabilities, cognitive disabilities, and visual impairments.
What is it that it means to be underbanked or unbanked?

Unbanked is a term used to describe a situation where you do not have a bank account. Being underbanked means the fact that you do have a financial institution accounts, but you also use alternative financial services, such as check cashing as well as payday loans.
How many people in the United States are unbanked?

Around five percent of the U.S. population, or 7.1 million households, were unbanked at the time of May 2021. The number of households without banks was higher in Hispanic, Black, and low-income families.3
What are the problems that language barriers in banking cause?

Language barriers can make people with limited English proficiency (LEP) less likely to seek out banking and financial services. This can make it harder in managing their money, paying their bills, and save money. Additionally, they are more likely to utilize expensive banking options, like check cashing services as well as payday loans.
Do banks have translators?

Banks are able to use automated tools for interpretation and translation to communicate with customers who have limited English proficiency. Banks are increasingly hiring translators and interpreters who can communicate with customers on the phone or in person.
The Bottom Line

Language obstacles can make it difficult for those with limited English to obtain the banking services or products they require, however steps are being taken to tackle this issue in the U.S. As the banking industry becomes more inclusive individuals with less English proficiency might have a better chance of opening bank accounts or apply for loans, and manage their finances without having to pay high fees in the process.
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