Low-income households in the United States often lack access to bank accounts and face
high costs for conducting basic financial transactions through check cashers and other alternative
financial service providers. These families find it more difficult to save and plan
financially for the future. Living paycheck to paycheck leaves them vulnerable to medical or
job emergencies that may endanger their financial stability, and lack of longer-term savings
undermines their ability to improve skills, purchase a home, or send their children to college.
High-cost financial services and inadequate access to bank accounts may undermine widelyshared
societal goals of reducing poverty, moving families from welfare to work, and
rewarding work through incentives such as the Earned Income Tax Credit. This paper calls
for the transformation of financial services for the poor. Better access to financial services is
critical for low-income persons seeking to enter the economic mainstream.