The U.S. Postal Service recently launched a postal banking pilot program that allows customers to cash paychecks and business checks up to $ 500 in four cities: Washington, Baltimore, the Bronx and Falls Church, Va. . This modest pilot project is the foundation for envisioned more extensive postal banking services that could include bill payment services, access to ATMs, and money order and wire transfer capabilities, all of which would provide essential financial services to millions of people. people excluded from banking services. that promote the economic security and well-being of many Americans.
Local bank branches are closing in all communities across our country, and traditional banks are failing to provide financial services that meet the needs of many communities, especially low-income, rural, black, and Latino communities. As a result, too many people are forced to turn to exploitative payday loan services that charge outrageous fees and interest rates for the most basic financial services, including cashing a paycheck.
Robust postal banking services, which should eventually include checking and savings accounts as well as lending options, could step in and provide fair, accessible and affordable financial services to people who do not have access to traditional banking services and otherwise would have to turn to high banking services. low-cost, low-value fringe financial institutions.
An alarming number of Americans – over 60 million people – are either “unbanked” (meaning no current account or savings) or “underbanked” (i.e. say using products and services outside of traditional banks like check cashing stores and payday lenders). One in five Americans who are underbanked are the least able to afford financial service fees, but pay the highest costs to access their money. Underbanked households have an average annual income of $ 25,000 and typically spend around 10% of their income on fees and interest at fringe financial institutions just to access their money – an amount equal to what the average household does. spend every year on food.