“Underbanked” Rely on Payday Loans and Charge Cards for a Way Out


According to the National Retail Federation consumers are expected to spend more $ 727 billion in holiday shopping this year. However, for many thousands of Hawaiians living without a bank account shopping can mean paying high interest loans and prepaid card fees as well as a continual cycle of debt. GreenDay direct loans is also a good option for you.

This is the land of the unbanked.

Shyla lafaele, a N. N? Kuli resident and mother-of-two, N.

Lafaele stated that “I couldn’t keep my payments on my card track, then it turned into negative and it was impossible for me to get out of it.”

The account was eventually closed. However, it only made things worse for her when she started receiving a salary again.

“I couldn’t open any kind of bank account. The only way to open a bank account was to get a prepaid credit card… But that comes with a charge,” she explained.

Alternative financial services such prepaid debit and cash control cards, payday loans, and cash control services have been developed for the “unbanked”, people such as Lafaele.


These services are sometimes convenient for people who do not have access to traditional banks services. However, these services often come with high fees that add up over time, Gilbreath states. He is the Director, Loans and Development, Hawaiian Community Assets.

Gilbreath said that it was $ 1,200 per family if they are unbanked or underbanked.

According to a survey done by the Federal Deposit Insurance Corporation, almost 20% of Hawaii’s population lacks access to banking or is underbanked. The unbanked don’t have an account, but the unbanked do. However, both have to turn to these more expensive financial services in order to make ends work.

Gilbreath explained that “It could keep families stuck where if something happens they don’t have any money to fall back upon.” However, Gilbreath also said that they cannot move forward. 


Aloha United Way’s CEO, Norm Baker, said alternative financial services were a risky move for low-income households.

“[They] tend to be very, very susceptible to any kind economic crisis, even minor.” Baker stated that there are many things that a lot of people can handle, such as a child getting sick and needing medicine. These people, a minor economic crisis that can cause them to become homeless, may end up in situations where they are not even able to pay the bills. 

Aloha United Way did a 2018 study on financial hardships in Hawaii called the ALICE. ALICE stands as Asset-Limited and Income-Constrained. However, it is employed. This acronym was invented during the Great Recession to help those who were struggling for money.

“During the recession in Hawai’i, 6% households became financially self-sufficient and ALICE,” he explained. Fast forward to 2019. And many of us would likely agree. “We are regaining our strength from the Great Recession. Everything seems to be going great. Stock markets are doing well. Unemployment rates low. This population, which fell into ALICE during the recession, has never recovered.”

This lack of access traditional banking services is one reason ALICE households are unable to attain economic self-sufficiency.

Chedel Majamay is a Hilo resident who is a mother to four children. To break the cycle, she needed hours of financial counseling as well as an aggressive savings plan and uncomfortable discussions.

“It would say, “Mom. Is this possible?” You feel like this is the only person who has to deal with this daily struggle of a paycheck. Majamay explained that you feel like it’s impossible to save money.

Financial education can help unbanked households learn and save but it is difficult to get credit or capital out of the traditional banking system.


Hawaiian Community Assets, one example, offers microloans with rates up to 15%. Compare that with the average interest rates on payday loan loans, which is around 400%.

Bank of Hawai? I began offering “second-chance” bank accounts starting in 2015. The Bank of Hawai The I EASE account has been created for Hawaii residents, such as Lafaele.

Gilbreath believes there are better options.

Gilbreath stated that it was important to “expand the conversation about unbanked or underbanked in order to really talk access to capital and credit to our families” and “if we don’t talk about this, again, you’re going to see families with hardship, an emergency, and they’re going to be in financial ruin.”

FDIC data shows that underbanked and unbanked households have declined over recent years. According to the FDIC’s most recent survey, about 32 million Americans don’t fully participate within the banking system.

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