Not surprisingly, low-income people are the ones most likely to be underbanked, according to FDIC data. Among households with annual incomes of less than $15,000 a year, 28% have no bank account and another 22% have less than a full range of services. Rates of underbanking are similarly high among the unemployed, people without high school degrees and those under the age of 25. In addition, African-Americans, Native Americans and Hispanics have higher rates than Whites and Asians. Only about 5% of employed, middle-class Americans are without bank accounts, but more than 20% use financial services outside of the banking system – typically for reasons of convenience.

It’s one thing, of course, for relatively affluent people to pay a fee to cash a check because they are in a rush, and quite another for someone to rely on so-called alternative financial services for all of his or her transactions. Check-cashing services in New York are permitted to charge 1.91%. If someone with a $15,000 income uses them regularly to cash paychecks, that could cost up to $286 a year. Postal money orders cost $1.15 apiece, so that someone using them to pay three bills a month would spend another $41 a year. Other charges – for prepaid debit cards, say – could push the total cost to more than $500 a year. And the cost of consumer borrowing outside of the banking system is horrific. A 30-day auto-title loan charges interest equivalent to an annual rate of 50% to 100% or more.