Banking While Poor

From Fiascos and Fees to the Fight for Financial Inclusion

For the 25 million Americans without a bank account, managing money can be fraught with hazards—just ask any of the thousands of RushCard customers without access to their paychecks due to a technical problem. Yet the perils aren’t constrained to the cards hanging on the j-hook at the grocery store: states increasingly impose costs and conditions on how struggling families can access the public benefits they’ve qualified for, all while curbing consumer protections and discouraging saving.  

This past spring, for example, Kansas proposed an unprecedented restriction on families using state-issued benefit cards to access their cash assistance: households would be prohibited from withdrawing more than $25 per day, exacerbating low-income families’ financial vulnerability and subjecting them to daily ATM fees at taxpayer expense.

Incidents like the RushCard and Kansas examples emanate from larger systemic shortcomings. Hidden fees and bad experiences have driven many Americans from traditional banking, while numerous others have been excluded involuntarily due to a minor error like a bounced check. Yet many of the new products designed to fill this void come with their own hidden costs, limited functionality, and inadequate consumer protections. Likewise, the products states use to distribute assistance often expose low-income families to needless fees while doing little to facilitate their long-term financial security and capability.

Creating a more equitable marketplace will require action at the federal, state, and local levels. In a new policy paper released by the Asset Building Program, Aleta Sprague builds on a survey of state policies and practices to outline a comprehensive set of recommendations for leveraging the public assistance system to integrate more low-income families into the financial mainstream. What other steps are necessary to protect and empower consumers attempting to navigate this marketplace? What are the promising efforts underway to create entry points for low-income consumers to connect to safe, affordable and functional financial products? 

Join New America for a discussion about how to build better banking options for low-income families and ensure that all Americans have safe, secure access to their money.

Follow the discussion online using #BetterBanking and following @AssetsNAF.


Desmond Brown
Program Specialist, Office of Financial Empowerment, Consumer Financial Protection Bureau

Andrea Luquetta
Policy Advocate, California Reinvestment Coalition

Jonathan Mintz
Founding President and CEO, Cities for Financial Empowerment Fund

Aleta Sprague
Program Fellow, Asset Building Program, New America


Rachel Black
Senior Policy Analyst, Asset Building Program, New America