Stuff You Should Know - Can you live without a bank account?

Episode Date: December 27, 2016

Seems like it would be nearly impossible to live without a bank account these days. But it is possible! Learn all about banking and personal finance in today's riveting episode. Learn more about your ad-choices at https://www.iheartpodcastnetwork.comSee omnystudio.com/listener for privacy information.

On the podcast, Hey Dude, the 90s called, David Lasher and Christine Taylor, stars of the cult classic show, Hey Dude, bring you back to the days of slip dresses and choker necklaces. We're gonna use Hey Dude as our jumping off point, but we are going to unpack and dive back into the decade of the 90s.

We lived it, and now we're calling on all of our friends to come back and relive it. Listen to Hey Dude, the 90s called on the iHeart radio app, Apple Podcasts, or wherever you get your podcasts. Hey, I'm Lance Bass, host of the new iHeart podcast, Frosted Tips with Lance Bass. Do you ever think to yourself, what advice would Lance Bass

and my favorite boy bands give me in this situation? If you do, you've come to the right place because I'm here to help. And a different hot, sexy teen crush boy bander each week to guide you through life. Tell everybody, ya everybody, about my new podcast and make sure to listen so we'll never, ever have to say. Bye, bye, bye.

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Hey, and welcome to the podcast. I'm Josh Clark, and there's Charles W. Chuck Bryant. And it's just us. We've been abandoned this week. And how? No, it was in there for a second earlier, but. It's like home alone. Boy, I love that movie when it came out.

Oh, yeah? Yeah, I thought the sequence, the big break-in sequence where he had everything rigged that 15 or 20 minutes. I thought that was one of the funniest things I'd ever seen. That was a pretty good movie. I just laughed and laughed and laughed.

Was that a John Hughes movie? Yeah. Okay, makes sense. Oh, that Chicago suburb setting that he loved. Oh, yes, he did. R.I.P. R.I.P. Chicago suburbs. No, R.I.P. John Hughes.

Oh, I see. That makes way more sense. Yeah. Yeah, it was just a couple of years ago, right? Yeah, not too long ago, for sure. Within the last five, I would say. Man, all those great movies. Crybaby, Pink Flamingos.

Nope. Apocalypse Now. Yeah. He was good. Oh, wow, he passed away in 2009. So, yeah, seven years ago. What? No.

Wow. Oh, yeah, I thought it was way more recent than that. Time flies in a world without John Hughes. You know where time doesn't fly, Chuck? At the beginning of our episodes. Kind of drags. That's funny. So, today we're talking about the possibility,

the potential of living in this modern American life, this modern world in general, without a bank account. Yeah, this ended up being a little more interesting than I thought it was gonna be. Oh, yeah? Mm-hmm. Well, I'm glad that was the case.

It was less interesting than you thought it was gonna be? No, no, but I mean, we've had some of those before. Like, Jack Hammers comes to mind. That was better than you thought it was gonna be? No, it was the opposite. Yeah. I was like, wait, wait, wait. There has to be more on Jack Hammers than this.

Nope. That was your pick? Yeah, it was. No forever bear that cross. Yep. So, you would think that banks in general, as ubiquitous and huge and powerful and... Gross.

Out of control as they are, had been around for millions of years, right? Maybe not millions, tens of thousands of years. Sure. It turns out actually that the bank, the concept of the bank as we see it today, is actually only about 500 or so years old. Yes.

I would have guessed way older than that. Yeah, and I'm glad this article did a little history there because I didn't know any of this stuff. The first actual bank, kind of modern bank that we think of as a bank, was the Bank of St. George or the Banco di San Giorgio in Genoa, Italy. Or is it Genoa? I've always seen Genoa.

Genoa? Genoa? Genoa. So, that was... And they point out in this article that it wasn't the invention of banking because banking is different than a bank. Yeah, banking actually did start several thousand years ago. Yes.

As far back as Mesopotamia and Egypt. And this article says that grain started to be kept in temples in a grain bank. I saw gold. Oh, yeah. But the upshot of it was that these temples that were built were basically sacrosanct. The armies would protect them with their lives.

So, it would just make sense that if you wanted to store something extremely precious and valuable, like gold, we'll just put in a temple. So, the earliest reserve banks, I guess you could put it, were temples in Egypt and Mesopotamia. And then one, at some point, some of the local people or local rulers came along and said, hey, I really need some money.

You guys have tons of gold just sitting in there. Can I borrow some of it? And then I'll give you that amount back plus a little more for letting me borrow it. Yeah. And they said, why should we call this? And they call it banking. Yeah.

Do you know where that word came from? No. I don't either. Because they probably didn't call it banking. They probably called it like Sun Crow or something like that. So, let's go back to 1408 in Italy. And this is when Italy had city-states. Oh, wait, I had more.

I had more. Oh, you did? Yeah. Sorry. It actually is kind of interesting. All right, well, let me fire down the way back machine. Okay, yeah. Just keep it idling.

Okay. Keep the AC on. Yeah. So, you had the initial banking practices and they kept developing and developing. And then Greece and Rome really kind of took them and went to town with them. Things like book transactions

where you could go into a bank in one city and deposit some money. And then the bank would handle credit, arranging credit for you in another city. So, you didn't have to travel from one city to another, which is very dangerous with a bunch of money on you. Sure. It's a book transaction.

That came from like the Greeks and the Romans. And things were going along smoothly. And then Rome fell. And it was replaced by the Holy Roman Empire, which was a Christian empire. And Christianity had this very strict rule against usury. And usury today means extremely high interest rates. Whereas at the origin of the word,

it meant just charging interest at all. So, there was no money whatsoever in banking. So, there weren't any bankers. Well, the Jewish faith didn't have any rules against usury. So, as the Holy Roman Empire was in power for these several hundred years, they fulfilled the banking industry until finally about the, I think, 13th and 14th century

when like the Italians started to get into it. And they kind of created that modern banking system that we see today. Can I get back in? Yeah. Yeah. Can we go to 1408? Yes.

Specifically March 1408. This is like I teased before in Italy. This is the time of the city state when you would go to war with one another within your own country. Specifically in this case, Genoa was getting trot upon by Venice, long, long war with Venice, big rivals.

And basically, as what happens many times in war, is it sort of bled that city state of Genoa dry. And it was in bad shape. So, these folks got together, I did look it up, I can't remember who it was though, the initial investors that started the Bank of St. George. And they said, hey, let's create this thing.

And like literally in a building, it will be a bank. And we can finance repayment of all these war debts and earn a little 7% on top, interest on top of it all. And in fact, I got a better idea. Why don't we even have the power to go and collect city taxes and customs and stuff to make sure we get paid back. And it worked.

Yeah. It did, they brought Genoa out of bankruptcy. And apparently the bank went on until the 19th century. Yeah, like 400 years, the Bank of St. George. It's pretty impressive. It's really cool. Yeah, it is cool. One of the reasons probably why it was successful

is that the people who were overseeing it were directly invested into the bank substantially. Like if you were one of the treasurers, you had to invest at least 16,000 lira, which is several hundred thousand dollars in today's money directly into the bank, right? So you wanted to see that bank succeed like crazy because you were directly invested in it.

And if the bank went under, you stood to lose quite a bit. That's not the case with banks today. I mean, companies, and I'm sure including banks too, like their employees to be invested in the company, but certainly it's not a requirement that you have several hundred thousand dollars worth of your company's stock to be a director of the bank. And then the bank itself can very easily be overextended

just because of what are called reserve requirements, right? We should do like a whole episode on banking, by the way. Yeah, boy, especially that big fallout recently with Wells Fargo. Oh, about the fake accounts. Yeah. Dude, have you seen the ad that they have about it? Oh, no.

They have this ad and it's almost like they shaved off the first five seconds where they admit that their people created all these fraudulent accounts, right? And then the ad comes in at everyone who is affected will be fully refunded. We want to gain your trust back, but they never say specifically what they're talking about.

Like they never cop to it. It's bizarre. You know that thing. It makes it stand out like a sore thumb, you know? Like we need to say it. Yeah. It's an oily, weasley ad and they have it like it's, you know, they've got the Wells Fargo guy

like running in the background to distract you and make you think about your childhood playing with stagecoaches and stuff. Yeah. And Elizabeth Warren is somewhere like blood dripping out of her eyeballs in her living room. Yeah. Elizabeth Warren circa 2010.

Right. So, yeah. No, I mean, she's watching the commercial and crying blood tears. No, I'm saying Elizabeth Warren circa 2010 would have. I think these days she's like, whatever. No, man. She laid into him.

Oh, did she go after him? Oh, yeah. Yeah. You got to see that video. It was pretty awesome. Well, good for her. When was that made? Oh, when she lambasted him?

Yeah. Oh, it was right after it happened. It was like, you know, a month or two ago. Okay. Because I feel like she was a little more lionized in the last several years than she has been lately. Yeah. I mean, she went after specifically,

I mean, she just read the riot act to the CEO. That's good. And was like, are you going to give back your bonus money? She's like, this happened on your watch. Why don't you give that money back? He was like, are you talking to me? Sorry. But one of the things I wanted to say though

about banks that is just such in such stark contrast to the idea where you used to have to contribute your own money, the reserve requirements of banks, I was looking into this, Chuck, you ready? Yes. If there's a 10% reserve requirement that a bank has, and they have $100, they can loan out 90 of that $100 to somebody, right?

Okay. So they have a 10% in reserve. Now, let's say that that person writes a check for that $90. Like they borrowed that $100 to, or they borrowed that $90 to pay off a debt. So they write a check for that $90 to somebody who banks with that bank.

So that $90 comes right back to that bank, right? They can loan $81, 90% of that and so on and so forth until this $100 chunk can be like loaned and repaid and loaned and repaid all over the place, which makes sense. And it keeps everything kind of going financially. But the problem is if something happens, if a panic sets in,

this is why it runs on banks or such travesties and everybody calls in their loan all at once, well, there's a lot of people who are calling in that one single $100. Yeah. Rather than having the time to pay it back and then call it in from somebody else and use that to pay the other person back,

it's just a big cluster all at once. Oh, wow. That makes sense. All right. That's just one of the many interesting things about banks. Yeah. I mean, there are clearly other podcasts that we should tie to this one, I think.

Sure. But since this one is about not banking, we'll take a break here, go withdraw our funds and we'll be right back. On the podcast, Hey Dude, the 90s called David Lasher and Christine Taylor, stars of the cult classic show, Hey Dude, bring you back to the days of slip dresses

and choker necklaces. We're gonna use Hey Dude as our jumping off point, but we are going to unpack and dive back into the decade of the 90s. We lived it and now we're calling on all of our friends to come back and relive it. It's a podcast packed with interviews, co-stars, friends and non-stop references

to the best decade ever. Do you remember going to Blockbuster? Do you remember Nintendo 64? Do you remember getting Frosted Tips? Was that a cereal? No, it was hair. Do you remember AOL Instant Messenger and the dial-up sound like poltergeist?

So leave a code on your best friend's beeper because you'll want to be there when the nostalgia starts flowing. Each episode will rival the feeling of taking out the cartridge from your Game Boy, blowing on it and popping it back in as we take you back to the 90s. Listen to Hey Dude, the 90s called

on the iHeart radio app, Apple Podcasts, or wherever you get your podcasts. Hey, I'm Lance Bass, host of the new iHeart podcast, Frosted Tips with Lance Bass. The hardest thing can be knowing who to turn to when questions arise or times get tough or you're at the end of the road. Ah, okay, I see what you're doing.

Do you ever think to yourself, what advice would Lance Bass and my favorite boy bands give me in this situation? If you do, you've come to the right place because I'm here to help. This, I promise you. Oh, God. Seriously, I swear.

And you won't have to send an SOS because I'll be there for you. Oh, man. And so will my husband, Michael. Um, hey, that's me. Yep, we know that, Michael. And a different hot, sexy teen crush boy bander each week to guide you through life, step by step.

Oh, not another one. Kids, relationships, life in general, can get messy. You may be thinking, this is the story of my life. Just stop now. If so, tell everybody, yeah, everybody about my new podcast and make sure to listen so we'll never, ever have to say bye, bye, bye. Listen to Frosted Tips with Lance Bass

on the iHeart Radio app, Apple podcast or wherever you listen to podcasts. All right, so if you live in modern society today, it is pretty tough to get by without a bank. Most cases these days you have, well, I don't know about most cases. But in many cases you have automatic deposits of your, of your work checks. Sure.

A lot of people pay their bills wirelessly online directly from their bank. You might have a student loan. You might have a car loan. You might have your house mortgage. You might pay your credit card bills. All this stuff is running through a bank most likely. And you would think it's probably impossible

to not have a bank account these days. And I would say pretty much all Americans have them. Not true. Well, no, pretty much all Americans do, like 93% do. Yeah, but that's not all. No, no, it's true. Yeah, 7% of Americans do not have bank accounts. About 9 million people last year in 2015

did not have bank accounts. 9 million people is a lot of people. No, it really is. And apparently that's the lowest. That's household, sorry, not people. Yeah, you're right. That is a big distinction, too. And the FDIC said, man, that's the lowest

since we've been tracking this by far. And someone said, well, how long have you been tracking this? They said, well, the last six years. Really? Yeah. Which I'm like, really, that's when they started tracking it? But apparently so, 2009. So if you want another number, that's

the 9 million American households don't have bank accounts at all. Then there are 25 million households in addition to that. So that makes almost, that's like 34 million households, which that's a substantial number at this point. Sure. The 25 million are what's called underbanked, meaning they may have a bank account,

but they don't use the bank account. Yeah, they don't use it because they are probably afraid of overdraft fees or they have maybe a bank account that got grandfathered in so that they don't have to pay minimum amount fees. And who knows, there's all sorts of reasons for people to not use a bank account that they have. But probably chief among them is overdraft,

which we'll talk more about. Yeah, and the majority of these underbanked people in the United States are poor usually. A lot of times, they're minorities. A lot of times, they're less educated. And these communities, I mean, there's a few reasons why they may not want to use a bank. One, maybe they don't trust banks.

And if you look in the history, the United States are certainly even, we're just talking about the Wells Fargo scandal. Like when you see stuff like that on the news, it should be upsetting to everyone. But obviously, if you're poor and you don't have a lot of money, that may scare you into not wanting to use a bank at all.

Right. Yeah, and another one is that the overdraft fees, which, so basically, I guess in 2001, the current overdraft fee idea scam, you could call it, was set up as a way to generate way more money for banks, right? Yeah. And the way that overdraft fees generate money for banks is when you are overdrafted on your account,

they can charge you a fee for covering that amount, right? And then you still have to deposit that amount, but they don't return your check. They cover the check that you paid. But they charge you a fee, say, like $35 for that amount. And it seems fine and dandy, and everything's fine. But there's something called clearing checks from high to low, right?

OK. Where the bank will clear checks in descending order of value. So if you have $100 in your bank account, and you have a check out for $150, a check out for $25, a check out for $5, and a check out for $15, right? Yeah. If they cleared the lower amounts first, and then the last one, only the last one

would bounce and create an overdraft fee, if they start with the bigger one, well, you've got an overdraft fee right out of the gate. But then you also have three more, because the other smaller checks all bounced as well. And so instead of one overdraft fee, they get to charge you four overdraft fees. And that was a huge thing when that was finally

reported and exposed. And that actually resulted in that rule that now you either, I think you have to opt in for overdraft protection, whereas before you had to opt out. Yeah. I remember back in the day when I was broke as a back, and I would overdraft things here and there. I remember I knew nothing about how things worked with finances.

Still don't really. But I just remember thinking like, I would rather say no, you don't cover me and then charge me. Just say no, you don't have the funds. Right, that's the smart way to do it. So I never understood. It was like, I think they even called it overdraft insurance maybe at the time.

Or I might be making it up. I seem to remember them saying that. And I was like, I don't want that. Just let the check bounce, and I'll take it up with them. Yeah, the way it was marketed, though, was like, hey, we value you. We want to make sure that you can pay all of your bills. So if something happens and you're overdrafted,

we'll cover it. We're just going to charge you a fee. And it sounds good. But again, when you go from high to low, and all of a sudden your overdraft fees go from one to four or five or however many, that's a huge problem. Well, and the people that are overdrafting and the people that are at least able to afford those fees.

Exactly. So it's a disproportionate burden on the poor, which makes it, as a scam, one of the more evil scams around. Yes. It's just wrong, man. So yeah, the idea that if you open an account, you should not opt in for overdraft protection. And it's easy to say when you're talking about checks

for like, you're writing a check for a Mountain Dew and some Cheetos, who cares if you're short for that? You can go without that. But when you're talking about like your rent check or like an actual grocery bill or something like that, it sucks that you can't get that stuff. But it's better to have to put a couple things back than to pay $35 for one $2 item that you went over by.

Right. Yeah, that's a good point. And this was, in my case too, this is also back in the day when you, I mean, a lot of times it was a mystery how much you had in your account. Right. If you couldn't just get on your phone and before you write the check and be like, oh, well, no, I don't have enough money

to cover this. Yeah, because even if you balanced your checkbook, sometimes you forgot to carry the one. Like it wasn't always 100% accurate. And if you had a life, you didn't necessarily rectify your bank checkbook every day. Oh wait, what does balancing a checkbook mean? Seriously.

Yeah, thank God for my wife. So another reason you might avoid a bank is philosophically. You may have, there may be a longstanding distrust of banks in your family that you don't want to put your money in or you may just want to be like, you know what, I don't want to take part in this modern society. I want to kind of drop out a bit. And a really good first move is to shut your bank account down.

That's a big statement. Oh yeah, it is. You know? Yeah. But a lot of people that are underbanked and don't have accounts aren't there on purpose. It's not some philosophical statement. A lot of times it's simply because they are poor

and they don't have a lot of alternatives. Yeah, and the other thing about not having a bank account, not only do you not have a bank account, you also are basically just avoiding banks all together. There's plenty of other things that banks offer, like loans and mortgages. Lollipops. Stuff like that.

Yeah, yeah, maybe some free nasty coffee. But so when you don't have a bank account, it's like the most basic unit of the banking world, right? If you don't have that, you obviously aren't going to be exposed to all these other things that can help things like build your credit history through like a revolving loan or a mortgage or a car loan or something like that that you can build up your credit for

and ultimately save money. So when you don't have a bank account for whatever reason, you are effectively out of the banking system. The problem is you can live parallel to the banking system outside of it, but it can be really dangerous, especially if you're just dealing with cash because that cash has to stay somewhere. And whether it's on you or in your mattress

or in a coffee can in your backyard, you're exposed for having that readily available to anybody who finds it or comes into your house with a gun to get it, which is another thing that sucks. Yeah, there's no insurance for that. If you lose your cash, you lose your cash. So one thing that people rely on sometimes these days as an alternative source for a loan at least

is something called a payday lender. You might have seen these little brick and mortar shops with the neon sign in the window, cash now available to you, next business day, stuff like that. You can go to these places. It's a quick application process. It won't affect your credit score sometimes. They'll say that if it doesn't.

And you can get money like the next business day. If you want $300, you can go in there and get $300. But you're going to pay a fee on that. And it's big. They say the fees, if you pay back within eight days, it works out if you put it on a scale of APR, annual percentage rate of like 380% is what you're paying on that loan.

I saw one for $100 loan on Keshnett USA site. For a $100 loan payback in eight days, for their flat fee and the interest, you pay 684%. It's one of those things, man, where you see this and you're like, man, how can you not look at it as bilking poor people out of more money? Well, some people who use payday lenders say, hey,

if you look at this, when you look at their rates and terms, it's all laid out. It's not some crazy percentage I have to figure out and come up with compounding interest or anything like that. It says, if you borrow $100, you have to pay us back $115. There's like a $10 service fee. And then for $100, it's $5 in interest. So that's what you owe us is $115.

It doesn't require a lot of thought. There's not a lot of wiggle room for them to add more fees or anything like that. You know what you have to pay back. But that said, they very quickly can comprise a trap, a payday lending trap that people get caught in, especially when they start rolling over loans. Yeah, and when I said it's hard to not look at it that way,

it's because it's not like it just feels like, hey, these people have their backs up against the wall and they really need $200. Exactly. So you can come get it from us. But then, of course, there are another complete other set of people that say, yeah, dude, that's the deal. And you know what, don't use that place then.

Right, right. The thing is, is some people are saying, OK, that's a valid philosophy, but you need to have an alternative that's fair for people because people need loans. People get overextended, emergencies come up. There's just things that people need money for legitimately. And they shouldn't have to be preyed upon.

So one of the alternatives that's been proposed is to get the regular standard banking industry involved in small short-term loans, which is what a payday loan is. Yeah, and pay six to 10 times less. Right, exactly. But as far as the bank's concerned, the customer would still be paying way more than what the standard APR that a normal bank charges.

But to the customer, it'd be way less than what they're paying to the payday lending place. I'm not sure why banks aren't into this yet. I got the impression that there might be some regulation that prevents them from being involved, or they're just not interested. But that seems to be the key because that also would seem to be a pretty good gateway to getting people who

want to have a bank account into the banking network. Yeah. By starting out with a small loan, you know? You would think so. You would. What else? Prepaid credit cards? Those are more and more popular these days.

You can get them at a convenience store. You can load money onto it, use it like a regular old debit card, what I say, credit card, debit card. Right. And it's just what you think it is. Here's the deal with those is they are really, really easy to scam.

In 2013, the Federal Trade Commission got 85,000 complaints totaling $43 million in scam frauds with debit cards. What do you mean? Like, they're almost impossible to track anything after purchase, impossible to trace. So it's really easy. It's like a prime opportunity for someone to scam someone.

Like, if someone says, hey, we request payment from a prepaid debit card, then once they have that information, they can just go use it. And it's not like they have some bank behind it that can trace it and track it down. Gotcha. It's just a really easy way to scam people out of money. Right.

And that's just one of the problems with them. Well, despite that, they've grown incredibly in popularity in the US between 2003 and 2012. The amount deposited on prepaid debit cards went from $1 billion to $65 billion. Between what? 2003 and 2012, nine years. Up to $65 billion, right, from $1 billion.

And despite the easy scam ability, but also getting kind of scammed by the people who legitimately run these prepaid debit card companies. Like, apparently, there's fees for everything from loading your card, which you usually do at an ATM, using an ATM, checking your balance. There's just a lot of additional fees that really kind of quickly sapped the amount of money

on your prepaid debit card. So fortunately, the Consumer Financial Protection Bureau stepped in. And as of last month, is it December yet? Yeah, tomorrow. OK, so as of October of 2016, there's new rules that say that if you are a prepaid debit card company, you have to disclose your terms up front.

You have to let people find out their balance for free, cut down on some of the fees. They have to be able to have the option to not have overdraft charges, overdraft protection. It's a lot more regulated now as of last month. Yeah, but I wonder what, if it's the same thing as banking, if they're like, sure, we'll disclose that in a 50-page document that no one ever reads.

What they need to do is say how they'd need to disclose this. Yeah, that's true. There's some guys that come to your house, maybe bring a little dinner, and just tell you, straight up. All right, I got a little worked up, so I'm going to go splash my face with eggnog. And I'll be right back after this.

On the podcast, HeyDude the 90s called David Lasher and Christine Taylor, stars of the cult classic show, Hey Dude, bring you back to the days of slip dresses and choker necklaces. We're going to use Hey Dude as our jumping off point, but we are going to unpack and dive back into the decade of the 90s. We lived it, and now we're calling on all of our friends

to come back and relive it. It's a podcast packed with interviews, co-stars, friends, and nonstop references to the best decade ever. Do you remember going to Blockbuster? Do you remember Nintendo 64? Do you remember getting Frosted Tips? Was that a cereal? No, it was hair.

Do you remember AOL Instant Messenger and the dial-up sound like poltergeist? So leave a code on your best friend's beeper, because you'll want to be there when the nostalgia starts flowing. Each episode will rival the feeling of taking out the cartridge from your Game Boy, blowing on it and popping it back in as we take you back to the 90s.

Listen to Hey Dude, the 90s, called on the iHeart radio app, Apple Podcasts, or wherever you get your podcasts. Hey, I'm Lance Bass, host of the new iHeart podcast, Frosted Tips with Lance Bass. The hardest thing can be knowing who to turn to when questions arise or times get tough, or you're at the end of the road. OK, I see what you're doing.

Do you ever think to yourself, what advice would Lance Bass and my favorite boy bands give me in this situation? If you do, you've come to the right place, because I'm here to help. This, I promise you. Oh, god. Seriously, I swear. And you won't have to send an SOS, because I'll be there

for you. Oh, man. And so will my husband, Michael. Um, hey, that's me. Yeah, we know that, Michael, and a different hot, sexy teen crush boy bander each week to guide you through life, step by step. Oh, not another one.

Kids, relationships, life in general can get messy. You may be thinking, this is the story of my life. Just stop now. If so, tell everybody, yeah, everybody, about my new podcast and make sure to listen so we'll never, ever have to say bye, bye, bye. Listen to Frosted Tips with Lance Bass on the iHeart Radio app, Apple Podcasts, or wherever you listen to podcasts.

All right, Chuck, so let's say that you don't feel like getting scammed by anybody. Nope. You just want to be free. Yeah. What can you do? What are some of the things you can do? Well, there are a few things that you can do.

You can try an alternative currency. OK, so if you want to be really weird. Canadian dollars is what you mean. No, I'm talking about, well, we've talked about Bitcoin. Is that even still a thing? Did that go out? No, no, it's still pretty much a thing, yeah. I think it's just maturing and growing constantly.

So we did an episode on Bitcoin. But I had no idea that there are alternative currencies in communities all over the world, but right here in the US. And had no idea. And it's a really cool thing, I think. Yeah, like Berkshares. You looked into Berkshares, right? Yeah, Berkshares, very clever name because it is Western

Massachusetts and the Berkshares. Launched in 2006. They have 16 branch offices and four local banks that support where you can actually get a Berkshare, trade in your money for Berkshares. 400 participating businesses. That's great. So here's what it is.

And in fact, I'm even going to read directly from their website because it just makes a lot more sense. It can get a little convoluted. Can we get some background music here, Jerry? You probably should. Something Berkshares. So there's a 5% discount. And here's how it works.

They follow $100 through a day to explain it. Wait, wait. Tell us when you start the quote. All right, ready? Here we go. You go to a bank and you purchase your Berkshares because you want to go to a restaurant that night, let's say. You go in with $95 US and you say, I would like to exchange

this, so they give you 100 Berkshares back. Yeah, right? So you go to your dinner. Your dinner's, let's say, $100 right on the nose. The restaurant takes your Berkshares, takes all 100 of them, you pay your whole bill and your Berkshares, and so you have actually spent $95 US for a $100 meal. So you've gotten your little 5% discount.

Then the owner of that restaurant has that 100 Berkshares. They want to deposit that for real money, or let's just say US dollars, return them to that bank. They bring them to the bank. The bank deposits that 100 Berkshares and gives the restaurant the $95, the same $95 that you exchanged. So in the end, you get that 5% discount because of that initial exchange.

That same $95 you traded for the Berkshares goes to the business where you spin it. Does that make sense? Yeah, and that's the key to this whole alternative hyper-local currency is that it's intended to keep goods and services within the community. Yeah. Because you can't go spend a Berkshares anywhere else,

but the Berkshares. They'll say, what is this weird-looking bill? What are you, from the future or something? And it's actually very cool looking. It's not weird looking. I looked it up. The one Berkshares unit is Maheacon, the original inhabitants of the Berkshares.

The five is W.E.B. Dubois. Wow. Born in Barrington. The 10 is Robin Van N, co-founder of the community supported agricultural movement, Indian Line Farm. This just keeps getting better. The 20 is Herman Melville. Awesome.

Author of Moby Dick, of course. The 50 is Norman Rockwell. Neat. Is it a Rockwell painting of Rockwell? No, it's just Rockwell. And then the 1,000 Berkshares. It's a photo of him drunk on a couch. Yeah, pretty much.

The 1,000 Berkshares is John Hodgman. He's a national treasure, not just a Berkshire treasure. No, I'm just kidding. There is no 1,000. But it's cool. They have their own money. And it's like, it just is a really, really cool thing. Like you're spinning.

There's, like I said, 400 participating businesses. So it seems like a really successful program. Yeah. And there's a lot of others. There's the Toronto Dollars, Salt Spring Dollars, Ithaca Hours. The Berkshire seems to be like one of the more robust programs. Yeah, I mean, I'd heard of it before. I hadn't heard of the other ones.

I think Detroit has one as well. But the Berkshares I'd heard of before. So it must be doing pretty well. Well, and this is nothing new. And the early, like into the early 1900s, local currencies were a big thing. Oh, yeah, like every bank could legally print money before the federal government finally said,

no, we're really the only ones who can print money. And there were, I think, like 100 or 1,000 or 10,000 or some ridiculous amount of currencies in the United States up until like the 1860s. Yeah, that's crazy. What about the M-Pesa? Have you heard of that before? I hadn't heard of that, but it's really pretty cool as well.

So M-Pesa stands for Mobile Pesa. Pesa means money in Swahili. And it's this kind of new alternative currency that's come up in Kenya in the last few years, right? Yeah, M is for mobile. Right, right. I forgot that part. Yeah, it's very key.

So in Kenya, most people don't have bank accounts, but they do have cell phones, and they rely on cash a lot. Well, as we said before, cash can be very dangerous. There's all sorts of bad guys out there who need or want cash for their own, but don't feel like going out and doing anything for it aside from robbing somebody, right? So cash is dangerous no matter where you are. And M-Pesa gets around that by allowing the people

with the cell phone. And I think it's the country's biggest cell phone provider who's created this. And you can go to one of the cell phone companies' kiosks. There's like 100,000 of them around the country. And you can say, here's some money. I'd like it deposited as credits on my phone. And all of a sudden, you have a phone full of money.

Well, the cool thing is you can take that money and transfer it via text to somebody else's phone. And it's as simple as that. It's as simple as that. You go load up your phone with some money at a kiosk, and then it's up to you to spend that money however you want. And you can use your phone to pay things like for groceries, for water, for goods and services, all using your phone.

It's basically what everyone who's thinking about the future of money thinks of when they think of the future of money. There's not going to be dollars or anything like that. It's all going to just be credits associated with your name. In this case, with the M-Pesa in Kenya, it's associated with your phone number. Yeah, and it's a big deal now. It's not just in Kenya.

It's in Tanzania, Mozambique, Egypt, Lesotho, Ghana, India, Democratic Republic of Congo, and then even in a couple of Eastern European countries now, Albania and Romania. They don't think it'll spread west, but you never know. It's a much bigger deal than anyone thought it was going to be, I think. Well, supposedly, there's a big push

to keep it from spreading westward by the banking industry, because one of the things that makes it so attractive is there's really low overhead involved in this. And so the cell phone company is charging very little interest or fees. So it's way cheaper to borrow or get or use money through the M-Pesa system than it is through traditional banks.

Apparently, M-Pesa's just kicking their butts all over the place. Yeah, and of course, what has happened then is that the banking lobby has started barking all over the world to block things like M-Pesa from coming into their markets. Yeah, that's what I'm saying, because they would just completely undermine them. And again, this is basically the future of money, that there's credits associated with your name,

which I mean, if you bank virtually online or you get your paycheck electronically and you pay your bills over websites and all that, you're already there, basically. It's just dressed up to kind of look like what you think of as money, too. But it's still just credits and numbers associated with your name, and in this case,

bank account numbers. This is just with your phone. And it also removes the bank, because it puts it on your phone. So it's up to you a lot more closely. Shout out to our episode on currency. Yes. That was a good one. Shout out.

So then there's this other thing. If you want to get a little more hippie-dippy even. If you thought Berkshires were crunchy, prepare for this. Yeah, get ready for time banking. Time banking is a thing where you give and take an exchange of services with the core principle being it's all equal. So if I babysit for your kid, you build my deck,

and the hours are the same. The value per hour is the same. Right. No matter what you're doing. It's a value. It's an hour of your time and effort. So it sounded kind of cool. It's like a barter service exchange,

where basically all you have to do is get people to agree on that core principle. And then you have kind of the same cool thing going on in your community. So I went to their website, and there's a map. You can view by map the places where you can time bank. And I clicked on, boy, I feel like I clicked on about 50 of them. And none of them had any activity within three or four years.

I could see that. So I don't know if time banking took off like they thought. And so then I thought, maybe I'm looking in the wrong places. I was like, let's go to Burlington, Vermont. And sure enough, Burlington had some time banking going on in the last week. But other places in Vermont didn't. I was like, let me go to some really crunchy towns.

And a couple of them looks like they were still using it. But it doesn't look like, I don't know when this article is written, but I'm not sure how viable it still is. Well, I mean, I like the sentiment. Yeah, as a concept, it's cool. But I mean, are all hours of or all types of effort equal? If you agree that they are, they are. I mean, yeah, sure.

In that case, for sure. But it just seems ripe for introducing leachers and hard feelings and resentment and stuff like that. Yeah, well, you fix my fridge. I'll watch your driveway. What do you mean? I'll stand on there and watch it and make sure it's good. I'm a driveway watcher.

It's an hour. You can't challenge. Did you say watcher? No, no, no, watcher. Range hours said we can't challenge each other's hours. And then we got to finish up with this dude, Mark Boyle, the moneyless man. Yep, which I thought this was pretty admirable.

Yeah, he's written a couple of books. One called, I think the first one was called The Moneyless Man Colon, a year of free economic living, then a more recent one called The Moneyless Manifesto, both of which are available for purchase, I noticed. But the money doesn't go to him. They just dump it into a landfill. No, it goes to him.

But in his, I don't want to slag him. He does offer it completely free online. Oh, that's cool. If you want to read it for free, it said, or if you'd like to support the author, you can buy the paper back for $21.95. So he basically just said, I'm going to live without money for three years.

Yeah, it's like an experiment. He's like, you ever heard of AJ Jacobs? Is that the guy who traded up from a paperclip to a house? No, he's a writer in New York that has done, I mean, I think they call it stunt writing, which cheapens it a bit, I think, because he's awesome. But yeah, he'll do things like he did one called the Year of Living Biblically, where he completely just lived

according to the Bible's practices and stuff like that. So AJ is probably down with this Mark Boyle guy, except AJ lives in New York. So he wouldn't live moneyless. No, Mark Boyle went out to the woods, right? Yeah, well, AJ listens to the show. Oh, hey, AJ, how's it going? So this Mark Boyle may listen to the show.

Who knows, it is free. But he went out and lived in the woods and sustained himself through farming, foraging, and bartering, right? And he basically just said money doesn't exist to me. Not like you could give me money and I can use it for something like that. He just didn't use money at all.

And apparently, he said he was way happier during this time. Like it made him more creative. He had to get by with his personality or on his personality so he had to make sure it was a good one. Yeah, that one really jumped out at me as something beneficial. Like I didn't think about that. Like he literally was like, my currency was me and my character.

And how can you not work on that if that's what you're counting on? Can't be a jerk to everybody, you know? You got to be a good person. Yeah, no one wants to give a jerk a free bag of carrots. You know? That's a t-shirt. Sure.

He's Irish, by the way, too, which means he's a great person. Maybe he was at a show in Dublin. That wasn't free. No, I guess he could have snuck in. Does theft count? I wouldn't mind. He would have had to have explained himself, though. We take stowaways.

We do? Sure. Don't encourage that. Like we didn't talk about this. You got anything else? I got nothing else. Let's see, don't feed your baby's junk food or alcohol. Wise words across the board, no matter the episode.

Agreed. If you want to know more about living without a bank account, you can type those words in the search bar at HowStuffWorks.com. And since I said HowStuffWorks, it's time for Listener Mail. I'm going to call this a cool email from CoolKid. Hey, guys, I am Ryan Gunsiorowski. I'm 16 years old.

I've been listening to your show since 2010, when I was just 10 years old. Cool kid. Absolutely. I wanted to email you guys for so long, and I'm finally doing that. I found your show through my cousin. And when I first started listening,

I downloaded all the podcasts to my small iPod, all it could hold. I listened almost every night before I go to sleep, or to go to sleep with wonderful learning and entertainment that you two are masters of. I like this kid all over the place. I do, too. Last year, you came to Philadelphia for the live show

on Public Relations, and I was there. I was in awe to see you do your show live. When I was there, it got me thinking, I should complete my task of emailing both of you. So he came up with an idea on how to share his story of how he was diagnosed with type 1 diabetes. On August 7, 2014, he said, with that game,

a different world than the one I knew before. It was tough, but I knew that others with type 1 have had it so much harder than I am doing well, and I'm healthy, which is something I'm proud of. Another reason I'm writing is maybe you could take this on as a topic. Maybe a two-parter type 1 is one part, and type 2 is another. Not a bad idea.

Not a bad idea. A reason I want to make that request is that a lot of people don't understand the difference between the two. And you two, being the best at explaining things that I know, I thought you could totally explain it excellently. This kid has mastered flattery. He's the best.

I like this guy a lot. You have shaped my mind. You two have shaped my mind from the very start. Keep doing what you're doing, and keep being the best. Much love, Ryan Gunsierowski from Pennsylvania. Thanks a lot, Ryan. We appreciate that. And PS, if you want to put this on list or mail,

I wouldn't mind. Wink, wink, nudge, nudge. What a cool guy. Yeah, he's a cool dude. Ryan, we appreciate it. We will put that on the great list of ideas. And maybe we'll do that one day. Yeah, and you know what, Ryan?

If we ever come back and do a show in Philly or anywhere near you that you can get to, you, my friend, are on the guest list. Ooh, nice. You'll just have to remind us of that by writing us and saying, hey, give me free tickets in the subject line. Chuck will be like, wait, who are you? No.

You'll have to show us some ID, though, because there's so many people who will try to fake it now. Yes, and you will probably have to come with your parent. And that'll probably be the tickets are left under. OK, so we've hammered all this out, huh? This is a thrilling end to this episode. Yeah. If you want to get in touch with us like cool dude Ryan did,

you can tweet to us. I'm at JoshClarke. And then the official SYSK1 is SYSK Podcast. You can hang out with Chuck on Facebook at Charles W. Chuck Bryant, or stuff you should know. You can send us an email at stuffpodcast at HowStuffWorks.com. And as always, join us at our home on the web, stuffyoushouldknow.com.

For more on this and thousands of other topics, visit HowStuffWorks.com. On the podcast, hey dude, the 90s called David Lasher and Christine Taylor, stars of the cult classic show, Hey Dude, bring you back to the days of slipdresses and choker necklaces. We're going to use Hey Dude as our jumping off point, but we are going to unpack and dive back

into the decade of the 90s. We lived it, and now we're calling on all of our friends to come back and relive it. Listen to Hey Dude, the 90s called on the iHeart radio app, Apple Podcasts, or wherever you get your podcasts. Hey, I'm Lance Bass, host of the new iHeart podcast, The Frosted Tips with Lance Bass. Do you ever think to yourself, what advice would Lance Bass

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