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Language barriers in banking

The Price of Not Being Banked

The challenge of overcoming language barriers in banking

What is it to be underbanked or unbanked?

In what percentages of the United States are unbanked?

What issues do bank language barriers cause?

Do banks have translators?

The Bottom Line

Personal Finance Banking

Overcoming Language Barriers in Banking

Language barriers make it hard for some people to gain access to banking services

By Rebecca Lake

This article was published on December 02, 2022.

Confirmed by Suzanne Kvilhaug

In the United States, language barriers could hinder non-English-speaking people to use banking services. Therefore, making payments and saving money may be more difficult.

One in 12 people within the U.S. speak limited English and a large portion of them are unbanked.1 In the present, banks like the Consumer Financial Protection Bureau (CFPB) and community banks are making efforts to reduce the language gap to ensure that more people get the access to banking services they need.

Let’s take a look at the consequences of bank language barriers and how they can be dealt with.

Key Takeaways

People who have limited English within the United States may not have the ease of access to banking services they require.

An estimated 4.5 percent from the U.S. population is unbanked which means they don’t have bank accounts or have access to traditional banking products or services.2

Hispanic households account for 12.2% of the unbanked people.

Language barriers can make it difficult for non-native English people to gain access to banking services, which can create problems with things like paying bills or saving funds more difficult.

Initiatives by initiatives of the Consumer Financial Protection Bureau (CFPB) and community banks are helping to bridge the language gap.

Language barriers in banking

Language barriers can hinder the accessibility of financial services for people. Around 5% of people within the U.S. were unbanked, or didn’t have a bank account in 2020.3 But the rate for communities that are where English isn’t the main spoken language is more. For instance, among Hispanic households, where Spanish is often the primary language, 12.2% are unbanked according to the 2019 Federal Deposit Insurance Corp. (FDIC) data.4

About 22% or more of U.S. population speaks a language other than English at home, which is 67.3 million people.5 Many of these people have a good command of English However, a lot of them aren’t. More than one in 12 adults over 5 are restricted English proficient (LEP), meaning that they can speak English not very well.1

People and communities that are not fluent in English may have difficulty to get banking services within the U.S. Even if banks offer basic account information and customer services in a range of languages, financial disclosures and written documents may not be accessible in languages other than English. Furthermore, newcomers might struggle to understand the way that bank accounts, investments and other financial products work in the U.S.1

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

The Price of Not Being Banked

It can be costly to overcome a language barrier and cause you to be unbanked or underbanked. This means you have a bank account but also use other financial services.

The people who aren’t serviced by banks that are mainstream typically use more costly financial services. For instance, cashing check services may charge fees that range between 1% and 12% from the cheque amount.6 It could cost you between $10 and $120 to cash a $1,000 check. Banks may accept checks from non-customers, but it could still mean paying a fee of 5 to $10. For people who get paid by check because they don’t have a banking account, these charges can add up to thousands of dollars per year.

Borrowing money can also be expensive if you rely on other banking services. Options like payday loans or car title loans have significantly higher interest rates than traditional personal loans. Payday loans typically have APRs (APRs) of 300% or more they can lead to a cycle of debt that’s difficult to escape.7

Every state has its own laws regarding payday loans, including what interest rates and fees may be charged by lenders. Some payday loans are considered predatory and are prohibited in certain states.8

Overcoming Language Barriers in Banking

In recent time there has been rising awareness of the effect of language barriers in limiting access to banking and financial health. Financial services firms as well as federal agencies are working to solve this issue.

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

Individuals with little or no English proficiency can also seek out government programs for assistance in banking. A lot of states and cities have local advocacy for immigrants organizations that can direct people to local banks that offer services, education and outreach in different languages.

Finally there is the Consumer Financial Protection Bureau (CFPB) can provide assistance for those who have limited English proficiency. Contact (855) 411-2372 to get support in more than 180 languages. The CFPB also offers free training materials on banking in many languages.10

Note

Along with addressing difficulties with language banks and financial institutions are also taking measures to make banking accessible for people with speech or hearing disabilities as well as cognitive impairments and visually impaired.

What is it that it means being unbanked or underbanked?

Unbanked is a term used to describe a situation where you don’t have a bank account. Being underbanked means that you have a bank account but you also utilize other financial products, such as check cashing as well as payday loans.

What percentage of people living in United States are unbanked?

About 5percent from the U.S. population, or 7.1 million households, was not banked 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 people who have limited English proficiency (LEP) more reluctant to use banking or financial services. This can make it harder for them control their financial situation, settle off bills and save money. Additionally, they are more likely to utilize expensive banking options, for example, check cashing service or payday loans.

Do banks have translators?

Banks can make use of automated tools for interpretation and translation to communicate with customers who have limited English proficiency. More banks are hiring interpreters and translators who are able to communicate with customers via phone or in person.

The Bottom Line

Language barriers can make it more difficult for those with limited English to obtain the banking services or products they require, however efforts are being made to tackle this issue across the U.S. As the banking industry expands those with limited English proficiency may have a better chance of opening bank accounts or apply for loans and monitor their financial health without paying large fees.

KAS

Strive These 5 Things If you First Begin Payday Loans Near Me 550 (Due to Science)

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