The Unbanking of America: How the New Middle Class Survives by Lisa Servon

Book— In a move reminiscent of Barbara Ehrenreich’s famous undercover excursion into the world of the working poor (Nickel and Dimed), professor of urban planning Lisa Servon worked as a check casher at RiteCheck, a payday lender, and a hotline operator for those having difficulty paying back payday loans to investigate what these services offer to vulnerable Americans. What she found is that America’s banks are ill-serving America’s poor and middle class. With practices such as debt resequencing, where the largest debit transactions on a checking account are non-chronologically processed first to maximize overdraft fees, and long check-clearing times that make it hard for people living paycheck to paycheck to count on their money being accessible, it’s no wonder that alternative financial services are springing up to fill the void. Contrary to popular wisdom, though, not all of these new services are predatory (or at least are no more predatory than banks). In fact, many customers prefer them because their fees are upfront and immediate rather than opaque. Servon’s account paints a more nuanced picture than the banking=smart, check cashing=short-sighted framework that I certainly subscribed to before reading this book.

If you enjoy The Unbanking of America, I recommend Evicted, which examines the detrimental effects that unstable housing has on the poor. For more information on the specific topics covered by Servon, I recommend this Freakonomics podcast on the topic or payday lenders. (For other great podcast recommendations, come to our Discover Podcasts program on Wednesday, November 1 at 7 PM.)