In a Baltimore Sun op-ed published today, Professor Cassandra Jones Havard urges the United States to pay attention to the 27 percent of U.S. households that are “un-” or “underbanked” — that don’t have access to the full range of banking services.
“Fringe bank” customers are not making use of traditional banks, Havard writes. Instead they use high-fee money orders, check-cashing services, international remittances, payday loans, refund-anticipation loans, rent-to-own services, pawn-shop loans or auto-title loans.
A biennial survey by the Federal Deposit Insurance Corp., which looked at 2015, found that, as in previous years, access to formal financial services was skewed toward whites and the well-educated, while the use of informal financial services was skewed toward minorities and the less-educated.
Moreover, Havard writes, fringe banking’s negative micro- and macroeconomic repercussions affect economic growth and stability for all Americans: “An inclusive economy creates equal economic opportunity and, subsequently, economic growth.”
Continued Havard: “The economy surges when consumers have access to jobs and steady income, as well as access to the financial products and services they need. Participating in the economy has a positive impact on the economic lives of those with lower incomes because it allows them, over time, to improve their economic capability.”