A new study published Sept. 9 by the Institute for Business in the Global Context at Tufts University has found that using cash can be costly, especially for low-income Americans. In the United States, the poorest individuals polled spend an average of more than three times as much as the wealthiest ones to access cash. That amounted to about 81 cents a month for those earning less than $21,000 a year compared to just 25 cents for those with incomes of more than $100,000.
Low-income consumers also tend to spend more time getting cash. Americans on average devote 28 minutes per month traveling to get cash; but those who do not use a bank spend about five minutes longer getting to a place to where they can get cash, not including time spent standing in line. Wealthier people are more likely to have bank accounts, meaning that they can visit an ATM or cash a check without paying a fee, while lower-income people disproportionately use check-cashing services or prepaid cards with high fees.
Even though a secure, low-cost way to store and retrieve money can be an essential tool for achieving financial security, the poor are much less likely to have bank accounts, meaning that low-income Americans need a better way to access the cash they earn.