The U.S. Postal Service began offering expanded financial services in a handful of cities last fall, a potential first step toward a return to postal banking. In a pilot program, select Postal Service locations in four cities—Washington, D.C.; Falls Church, Va.; Baltimore; and the Bronx, in New York City—are offering services including check cashing, bill paying, ATM access, and expanded money orders and wire transfers. For example, customers can cash payroll or business checks of up to $500 and put the money onto a gift card.
According to the Federal Reserve, about 63 million Americans are under- or unbanked, meaning they do not have regular access to commercial banking and instead typically rely on high-fee options such as check-cashing outlets, money orders and prepaid cards. The USPS, which has more than 34,000 locations, could help close that gap. Advocates for postal banking see an opportunity for the Postal Service to provide access to an essential financial system while bolstering its own economic position. The USPS Office of the Inspector General reported that fees for financial services, even if set at a low cost, would bring in nearly $9 billion a year if 10% of those who are currently underbanked use the service.
It would require an act of Congress to reestablish postal banking beyond the services available in the pilot program. Progressive members of Congress have supported legislation that would reestablish postal banking. For example, Sen. Kirsten Gillibrand (D-N.Y.) has proposed the Postal Banking Act, legislation that would create a postal bank to provide low-cost basic financial services to people who do not have access, or have limited access, to America’s banking system. But Sen. Ted Cruz (R-Texas) and 18 Senate colleagues recently signed a letter opposing the idea.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The idea of banking at the post office isn’t new: Congress passed legislation to establish the Postal Savings System in 1910. It was designed to encourage working people and immigrants to use the banking system. The program started in 1911, and by 1947, deposits in the system had peaked at $3.4 billion. In the 1960s, deposits declined as more consumers turned to banks. In 1966, the Postal Service began to phase out the program.
-
5 Stocks to Buy for a Trump PresidencyThe race for the White House is heating up and these five stocks are set to benefit if Donald Trump claims victory.
-
6 Target-Date Funds to Buy For Your RetirementThese six target-date funds are good set-it-and-forget-it options that are a staple of retirement plans.
-
Mixed Jobs Report Keeps Fed on Track for Rate Cuts: What the Experts Are SayingJobs Report The Fed will cut rates this month. The only question is by how much.
-
July CPI Report Supports September Easing: What the Experts Are Saying About InflationCPI The continued downtrend in inflation raises the odds for a September rate cut from the Federal Reserve.
-
Weak July Jobs Report Signals Steep September Rate Cut: What the Experts Are SayingJobs Report A marked slowdown in hiring and rising unemployment means the Fed might have to make steep cuts to interest rates soon.
-
Fed Holds Rates Steady, Sets Stage for Easing: What the Experts Are SayingFederal Reserve The Federal Reserve left interest rates unchanged but signaled it could pivot to lowering borrowing costs sooner rather than later.
-
June CPI Report Comes in Soft: What the Experts Are Saying About Inflation
CPI Odds rise for a September rate cut after prices fall on a monthly basis for the first time in almost two years.
-
Softer June Jobs Report Raises Rate-Cut BetsJobs Report Slower hiring and a rise in the unemployment rate up the odds of the Fed easing more than once before year-end, experts say.
-
Fed Holds Rates Steady, Sees Just One Cut This Year: What the Experts Are SayingFederal Reserve The Federal Reserve kept interest rates unchanged and penciled in one quarter-point cut in 2024.
-
May CPI Report Comes in Soft: What the Experts Are Saying About Inflation
CPI A slowdown in inflation keeps the Fed on track for rate cuts later this year.
