http://www.economist.com/news/finance-and-economics/21571882-life-edges-americas-financial-mainstream-margin-calls
The FDIC released a survey that showed some 17 million adults are "unbanked" or in other words do not have a bank account. Additionally, one in every five American households is "underbanked", meaning that they do have a bank account but also rely heavily on alternative services like payday loans, cheque-cashing services, non-bank money orders or pawn shops. The trend also shows that the households without bank account are much higher among low-income households.
Lawmakers are looking at ways to decrease the amount of payday loans but the problem is that recent legislative acts made it harder for retail banks to serve low-income Americans. Banks lose on 37 percent of their accounts and therefore do not want to extend loans to those low-income households with no credit history. This is a problem that causes people seek alternative services like payday loans.
The problem was addressed by the officials and a few steps were already taken to decrease unbanked population. One of them is the use of a broader range of data to determine the credit history of borrowers. Another solution is presented through the pre-paid cards like the Bluebird card offered by Walmart and American Express. The share of unbanked households with pre-paid cards is predicted to grow at the rate of 21 percent over the next couple years.
Banks have to look for other ways to lower the number of unbanked or underbanked Americans. Lawmakers have to consider benefits and disadvantages of alternative services and construct policies that will benefit consumers.
I agree we would be better off as whole in the economy if everyone had a bank account. If they had money saved up this will allow them to have more money to spend and put it through our economy. The more people that have money to spend the better off we are all are because there will be less unemployment and the less unemployment the smoother our economy functions.
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