...When one month is flush and the other is fallow, it’s hard to maintain a balance, which leads to fees and other hits to your income. The FDIC found that more than 57 percent of unbanked households said they didn’t have enough money to keep an account or meet a minimum balance, while 35.6 percent of underbanked households said the same. Likewise, almost 1 in 3 unbanked households reported “high or unpredictable fees” as one reason they did not have bank accounts. Disproportionately black, Latino, and Native American, they rely on banking alternatives like payday lenders, check cashers, and pawn shops who, while predatory, are at least flexible.
Which brings us to “RushCard,” the financial product from hip-hop and fashion mogul Russell Simmons...
In reality, however, it’s a trap. In exchange for early access to their money, users face a web of fees and charges that add up to money you must pay to use your money. On top of a monthly fee, RushCard customers pay to withdraw from ATMs, to make point-of-sale transactions, to make signature transactions, and to receive paper statements. They also pay if their account is dormant.
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Sen. Elizabeth Warren, for example, has proposed “postal banking” as a federally sponsored alternative to payday lenders and services like RushCard. “USPS could partner with banks to make a critical difference for millions of Americans who don’t have basic banking services because there are almost no banks or bank branches in their neighborhoods,” she wrote in a Huffington Post op-ed last year...
...During the Taft administration—following the Panic of 1907—Congress relented, and from 1911 to 1966 (when, ironically, it was abolished under Lyndon Johnson), the United States operated the Postal Savings System. “By 1934, postal banks had $1.2 billion in assets—about 10 percent of the entire commercial banking system—as small savers fled failing banks to the safety of a government-backed institution,” notes Baradaran. “Deposits also reached their peak in 1947 with almost $3.4 billion and 4 million users banking at their post offices.”
