The numbers of “unbanked” and “underbanked” people are indeed growing. Seventeen million people nationwide are unbanked, up from ten million in 2002; forty-three million are underbanked. Why are low- and moderate-income people choosing not to use banks, if they’re really the best option? The answer was surprising: it turns out banks are often costlier for the poor than check cashers and other alternative services.
For low- and moderate-income people with few assets and some unpredictability in their income and expenses, banks simply don’t stack up well against check cashers and payday lenders. The number of people in a financially unstable position is rising. Yet policy makers continue to assert that banks are the answer. The High Cost, for the Poor, of Using a Bank : The New Yorker