Banks today are increasingly consolidating branch locations, while also moving away from low-cost financial services to high-profit activities. These actions leave marginalized Americans underserved and left behind. Without access to checking and savings accounts or small loans, consumers are vulnerable to a host of financial abuses.

In response, this paper argues for the public provision of household financial services: directly providing households with basic transaction services and customer credit, as well as creating a marketplace that would help regulate sellers and prioritize consumer safety.

Key Findings

  • Nearly 27 percent of U.S. households are unbanked or underbanked. But these numbers are worse for the most marginalized: Nearly half (49.1 percent) of households whose head does not have a high school degree are unbanked or underbanked; similarly, households whose income is $30,000 or under being financially excluded at a rate of 42.1 percent.
  • Black households are nearly six times more likely to be unbanked than white households, while Hispanic households are nearly five times more likely to be unbanked.
  • Even when the analysis is restricted to households with the greatest resources—those who own a home, have a college degree, and have incomes above $75,000—the data still indicates that black households are 2.5 times more likely to be unbanked and underbanked than their white peers.