1. Speedy access to money When you deposit a check into a bank account, you have to wait a few days before the cash is accessible. Many people live paycheck to paycheck and they cannot wait. Hence check-cashing services.
2. Overdraft fees These are incredibly regressive - punishing those who have low funds. Some banks were caught with predatory behavior - rearranging transactions in a day so the largest hit first and they could trigger multiple overdraft fees (since it is per-transaction) until laws were passed to prevent this behavior.
3. Other hidden fees (low-balance, etc) that aren’t very transparent and really painful when every dollar counts.
Not to mention cultural issues etc. Long-story short, there is a reason people use check-cashing services even though at face value they seem a worse deal than traditional banks.
(Source: was VP of ENG at Credit Karma)
I get why some old self-important bank does not want to deal with the poor and makes faces if you suggest it, but somebody has to yell pecunia non olet and jump int.
Why do cheques still exist? We haven't had them here in Norway for twenty years.
+ A fair amount of people have savings accounts and nothing else. They don't have a debit card and don't use that account with any regularity.
+ There are also some folks who have checking accounts but don't have or don't want to use debit cards. I don't fully understand the why, it sounds like this mostly older folks who don't trust them.
+ There are some access issues with banks. Most banks still want you to be in person for opening an account, and you need to be in person if you want to get cash. For some folks who aren't very mobile, most local banks don't have enough branches.
+ There are some people who really struggle with the paperwork. It's not a difficult form especially for the bank in particular I'm using a reference and the bank tellers will help you fill the form out (it's a page with your name and address, and your social security number basically) but that's enough of a hurdle it precludes some people. Some of the information that's collected here is required by the feds to limit moneylaundering, it's not just the bank.
I suspect it happens but have not heard of any cases of fees being directly the cause. I know I've had a few conversations where someone was surprised to find out you can do banking without fees, didn't understand it was possible to ask for a rate schedule, didn't understand ATM networks, etc. I suspect there's a financial literacy gap that's a cause here (and many subpar banks being fee happy).
It largely is expensive and annoying to not have a bank account. Typically what keeps people from having a bank account is being in poverty: bad credit, no permanent address, dodging debt collectors, and probably a lot more reasons than that.