Banking Deserts

"In June the Federal Reserve Bank of St Louis estimated that there are now more than 1,100 banking deserts—defined as census areas at least ten miles from a bank—in America."

Community organisations worry that if branches continue to close in poor areas, many neighbourhoods could become reliant on payday lenders and cheque-cashing stores.

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Even with the exorbitant fees ($5 to $12 per month) charged to customers just for maintaining a checking account, branches are being shuttered across the country. By the way, stating that "only" 1.7% of the population resides in a banking desert understates the problem. A single bank may enable an area to escape the definition of a desert, but with no competition one bank can ratchet the fees much higher.

It helps to live in a prosperous zip code; within a mile from our house there are five major banks. Even so, we've winnowed the number of banks we use to two; in order to avoid the fees they all require a minimum balance of $2,000-$3,000, and spreading it around becomes costly very quickly.

Willie Sutton famously and apocryphally said he robbed banks "because that is where the money is." Banks follow that philosophy, too, when deciding where to open for business.