People of color are disproportionately underbanked. The reasons are complex, ranging from inaccessible bank branches and onerous bank account requirements, to credit problems, discrimination and mistrust of traditional banks. The result is sobering. Almost half of black households and a third of Latino households are unbanked or underbanked and lack access to affordable basic financial services to use and save their money. This both stems from the racial wealth gap in America and exacerbates it.
A recent trend has made banking even less accessible: For at least a decade, banks have systematically closed bank branches, including a record 3,324 branches nationwide in 2020 alone. These bank closures are creating ” bank deserts ”in many low-income, black and rural communities. More than 90 percent of bank branches closed since 2008 were located in communities with household incomes below the national median. Rural communities are particularly vulnerable to banking deserts, and majority Black communities have lost more bank branches than any other community, including low-income non-majority Black communities.
Postal banking provides an economic lifeline to countless Americans living in banking deserts. The 34,000 postal service facilities serve all postal codes across the country. Over two-thirds of census tracts that have a post office do not have a bank branch.
The postal bank also provides transparent and fair services and costs. Traditional banking fees and requirements, such as minimum balance requirements, activity fees, and overdraft fees, exclude low-income and low-balance customers. These high fees and requirements are compounded by the racialized current account costs and fees which are $ 190.09 higher for blacks, $ 262.09 higher for Latinos, and $ 25.53 higher for Americans. Asian origin than for whites for entry-level current accounts. Even worse is the exploitation by payday lenders who charge high fees for check cashing services and interest rates of up to 589% for payday loans. In contrast, the Postal Banking Pilot Project allows customers to cash checks up to $ 500 at a fixed price of $ 5.95.