If you have beaucoup bucks and can keep $20,000 to $250,000 or more in eligible deposit, retirement, or investment accounts, big banks will roll out the red carpet, offering loan discounts, fee waivers, and more generous savings rates. For example, Bank of America’s Platinum Preferred rewards customers who keep at least $50,000 on deposit can get a 0.35 percent discount on an auto loan, a $400 reduction in origination fees on a mortgage, and a 0.06 percent yield vs. the bank’s standard 0.03.

But consumers in 34 million U.S. households who may live paycheck to paycheck and have little or nothing to do with a traditional bank or credit union get none of those goodies. Many in that group think the cost of traditional banking is too high. Almost 58 percent of respondents in a 2013 survey said they couldn’t meet minimum balance requirements, and 31 percent said high or unpredictable account fees were to blame. The survey, involving almost 41,000 households, was done by the Federal Deposit Insurance Corp. and the Census Bureau.

Many lower-income consumers who want banking services don’t even have access to a bank. Poor neighborhoods have become “bank deserts”; 93 percent of branch closings since 2008 have been in lower-income ZIP codes, according to a study by Bloomberg Business. Those consumers are also handicapped by a lack of familiarity with their banking options. That creates a marketplace vacuum that gets filled by high-priced, predatory financial service providers, including payday lenders and check-cashing stores. Prepaid cards can be a better option, but some can bite with unnecessarily high fees. These consumers can least afford to go without the basic benefits that higher-income consumers enjoy, such as free checking, free check cashing, and free online and mobile banking.

Fixing Banking

To change that, Consumer Reports’ advocates are working with the Consumer Financial Protection Bureau to prohibit overdraft fees on prepaid cards and to make error resolution and certain legal protections mandatory. Final rules are expected early this year and will better protect consumers when problems arise, as they did with the RushCard outage last October, when cardholders couldn’t access their money for more than a week. We’re also asking the Postal Service to use its authority to provide basic, affordable banking services, including reloadable prepaid cards, ATMs, check-cashing services, bill payments, mobile banking, direct deposit, and international money transfers. The average underserved household spends an astounding $2,412 each year on interest and fees charged by alternative financial services, according to a 2014 study by the Postal Service’s inspector general. So post office banking could save them huge sums. The Postal Service already has the infrastructure in place, especially in communities that banks have abandoned. About 17,000 of our nation’s post office branches are in ZIP codes with only one bank or none at all.

Editor's Note: This article also appeared in the January 2016 issue of Consumer Reports magazine.