Lisa Servon is a Professor of Urban Policy at The New School, but has worked briefly at Check Center and RiteCheck in the South Bronx to better understand why so many people are using check cashers and payday lenders, prepaid cards, and lending and savings circles instead of banks. In the OP-ED Servon highlights the staggering number of Americans that are “unbanked”, nearly 25 million. Another 68 million Americans are “underbanked”, meaning they have bank accounts but also rely on alternative financial services such as payday loans and prepaid cards.
The problem, according to Servon’s piece, “is not that people are unbanked, but that banks are becoming too prohibitively expensive for people to use them”. The fees and charges associated with formal banking services often deter people from using their services and in some cases the barrier to entry is too great for America’s low-income population to access.
