Basic bank accounts are something that most middle-class Americans take for granted. We use our savings accounts to put aside money in case of an emergency, or to invest one day in a house or an education. Our checking accounts relieve us of the worry of carrying large amounts of cash. By contrast, an estimated 13 percent of U.S. families, including 10 million people who receive federal benefits, do not have bank accounts and the security that they provide. One-third of all minority households are "unbanked," as are one out of four renters, one out of six people under the age of 35, and 15 percent of families earning between $10,000 and $25,000 annually.
To be unbanked is to be under an economic disadvantage. It means that many people have to rely on fringe banking services, such as checkcashing outlets with high fees. But what is worse is the savings deficit that it creates for many working-class, and minority, and young citizens, who have a much harder time acquiring and building assets. These families and individuals are missing out on a critical component of economic opportunity. After all, building a nest egg is difficult to do if you do not have a nest.
In the past few years, in recognition of this savings deficit, the impetus of social policy has moved from that of entitlement to that of empowerment. Saving is empowering. It allows families to live without public aid, and provides them with a ladder into the middle class. It can actually change a family's economic station and set a better course for future generations. Electronic Funds Transfers (EFTs), which are . . .