#FinLit Book Review: "The Unbanking of America"

Between food stamps, subsidized childcare, financial aid from her community college, and student loans, Ariane gets by somehow and has not taken out more payday loans. But it would be a stretch to say she's financially healthy. After paying off her old payday loans and the overdraft fees that she had accrued at her bank, Ariane opened a new bank account. "I'm twenty-five years old and I'm moving forward in my life," she declared. "It seemed like the right thing to do." But with finances extremely tight, she recently overdrew her account by ten dollars. Her bank began hitting her with charges that quickly amounted to three hundred dollars. "It doesn't seem fair," she said. "I don't even want a bank account now." She now uses a prepaid debit card to manage her money. "There's nothing left over to save anyway," she said. "When I'm out of money, that's it."

Lisa Servon takes on a major issue in America: people who do not or cannot use banks. Some people may feel that avoiding banks doesn't make sense. Others may sympathize after learning tens of billions of dollars are paid in overdraft fees every year. Then there's a history of systemic bias in who gets access to physical banks, loans, and other financial products. What services do unbanked people use, and why? Servon investigates as a researcher as well as a participant, going so far as taking a part-time job at a check-cashing center. The eye-opening stories she reports from her customers and coworkers quickly make the case for check-cashing and payday loan services. She also shares firsthand stories about immigrant communities that use ROSCAs (ROtating Savings and Credit Associations, also called "money circles" and known by many nicknames across many cultures). There are also generational, educational, geographic, and technological divides to consider, as access to quality employment, customer service, smartphones, and data have huge impacts on how people conduct their lives. 

Some of the solutions of the unbanked are convenient and fairly dependable, while others are high-risk and exploitative. Servon takes banks and government agencies to task for their role in allowing poor or absent services to continue to drive people toward harmful options. Servon does not rest on any one symptom or solution. She does not advocate for a magic law or app that will fix everything, but she finds plenty of opportunities to make things better from every angle. Her author's note and citations in the back of the book demonstrate deep knowledge, self-awareness, and humility regarding the topics and communities she explores. 

Economic books like this, that combine academic and street-level research, have a lot to offer any reader. This book was published in 2017, and some banks have changed their policies since then to significantly reduce or eliminate overdraft fees. However, there is still plenty of room for improvement and innovation for millions of unbanked Americans.

Thomas M. is a Certified Financial Education Instructor℠ (CFEI®) and has previously blogged about Financial Lessons That Can Backfire, Talking To Kids About Money, and Online Financial Literacy Library Resources.