Economic Quarterly

Surprisingly, 15 percent of U.S. households, most with low incomes, do not own a checking account. How do these people make and receive payments? Why don’t they own checking accounts? These questions are answered using qualitative evidence from two focus group interviews plus quantitative evidence from several surveys. The evidence shows that there are low-cost alternatives to account ownership. For example, checks are often cashed for free at banks or grocery stores. These findings are especially relevant to the government’s efforts to make most federal payments by electronic means (EFT ’99) since the chief obstacle to implementing this mandate is the large number of government beneficiaries who do not own depository accounts.