In the 21st century, having access to a basic bank account has been compared to securing access to reliable “electricity, running water and telephone service.”1 Other commentators have gone further to declare that having access to financial services is “critical to success in the American economy.”2 Yet in 2002 in Puerto Rico, where we have one of the most advanced financial systems in the world, fully 36% of households did not have a checking or savings account.3 These households are marginalized from the financial system and essentially operate in a segregated, cash economy. In addition, over 75% of these households reported income below the federal poverty threshold for that year. Accordingly, when we refer to the “unbanked” population in Puerto Rico we are using short hand to describe some 454,000 extremely poor households.
These unbanked families must pay considerable costs for basic financial services and face enormous difficulties in accumulating savings for emergencies or to weather a temporary fluctuation in income due to, for example, sudden illness or divorce. The unbanked are also by and large cut off from traditional sources of credit either for short-term consumption or for home ownership because these persons cannot convey key financial information which banks need to evaluate in order to assess credit risk and comply with their credit guidelines.
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