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Book Chapter

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Low-income households often lack access to bank accounts and face high costs for transacting basic financial services through check cashers and other alternative financial service providers. Twenty-two percent of low- and moderateincome American households do not have a checking or savings account. Many other "underbanked" families have bank accounts but still rely on high-cost financial services. These households find it more difficult to save and plan financially for the future. Living paycheck to paycheck leaves them vulnerable to medical or job emergencies that may endanger their financial stability, and lack of longer-term savings undermines their ability to improve skills, purchase a home, or send their children to college. High-cost financial services and inadequate access to bank accounts may undermine widely shared societal goals of reducing poverty, moving families from welfare to work, and rewarding work through the Earned Income Tax Credit.