Banking the Poor: Policies to Bring Low-Income Americans Into the Financial Mainstream
This paper calls for the transformation of financial services for the poor. It states that better access to financial services is critical for low-income persons seeking to enter the economic mainstream.
Low-income households in the U.S. often lack access to bank accounts and face high costs for conducting basic financial transactions. Living paycheck to paycheck leaves them vulnerable to emergencies and lack of long-term savings undermines their ability to improve skills, purchase a home, or send their children to college. Costly financial services and inadequate access to bank accounts may undermine widely shared societal goals of reducing poverty, moving families from welfare to work, and rewarding work through incentives such as the Earned Income Tax Credit. Low-income families need support to enter the financial mainstream in terms of:
- Suitable government policy;
- Expansion of electronic payment systems and distribution networks;
- Financial and technological innovation;
- Governmental incentives that catalyze private sector efforts to expand financial services access for low-income families through financial and technological progress.
