Anneisha Williams is a 38-year-old woman from Los Angeles County raising six children. She works full-time at Jack in the Box and is an in-home caregiver. A hacker stole $500 from her checking account, and her bank refused to provide a refund [1]. Due to her distrust of the banking system, she joined the approximately 5 percent of Californians who have no bank account [2]. Unbanked people like Anneisha still earn income through checks. Without a bank account, they must use check cashing services. Essentially, these check-cashing businesses turn paychecks into cash, taking a specific fee or a percentage off as profit. Californians without a bank account also face significant challenges in accessing traditional lines of credit, meaning they are oftentimes forced to turn to payday loans. Payday loans are short-term, high-interest loans typically taken as paycheck advances. The U.S. check cashing and payday loan industry brought in twenty-two billion dollars in revenue in 2024. This industry thrives most during economic recessions. Its revenue comes from imposing fees on people trying to access their own income [3]. The average unbanked household spends about $1300 a year accessing alternative banking services [4]. Unbanked people are overwhelmingly economically disadvantaged minorities who face increased harm from bank and check cashing fees. Recently, California’s government began developing CalAccount, a potential solution to address systemic financial inequities by providing all Californians access to zero-fee financial services. Universal guaranteed zero-fee banking access could encourage California’s lowest-income families to trust traditional banking institutions, opening the door to countless opportunities for responsible money management and credit building.

The target population of the CalAccount proposition is unbanked and underbanked individuals. To determine banking access, the entire household acts as a singular unit [5]. This helps prevent major discrepancies when it comes to arrangements where one or a few household members manage the finances for other members, who are typically younger or elderly. A household is unbanked when no member has a bank account [6]. An unbanked household has no associated credit cards, checking accounts, or savings accounts. These households typically transact primarily through cash or other formats, such as prepaid debit cards or gold. Households may choose to be unbanked due to a distrust of the banking system, anxiety about fees, or even a poor financial self-image of not having enough money. Unbankedness can also result from an inability to provide identification or proof of address paperwork, the need to avoid debt collectors, or being on a no-account list because of past financial mistakes [7]. In underbanked households, unlike unbanked households, at least one member maintains a bank account. However, the household continues to rely on alternative financial services such as payday loans [8]. This choice can stem from many legitimate reasons, such as the fear of going under account minimums or living a long distance from financial institutions. Approximately 15 percent of California households are underbanked [9]. The unbanked and underbanked populations face unique difficulties beyond alternative financial institutions’ copious predatory fees. Underbanked households deal with an incredible lack of safety—cash may burn up in a fire or be stolen in a home invasion, whereas bank accounts are FDIC-protected. Unbanked people also lose opportunities to earn interest on savings and build credit. Because of its universal and free nature, CalAccount could be the solution to underbanking in California. 

CalAccount represents a revolutionary step in the government’s economic role, allowing the state to become a banking institution for all its citizens. In 2021, Governor Newsom signed the California Public Banking Option Act, which established the CalAccount Blue Ribbon Commission. This eight-member panel is planning how to implement CalAccount [10]. CalAccount would be a state-sponsored program giving every Californian the choice to have a free bank account. It would come in the form of a zero-fee, zero-penalty checking account and debit card. Californians would face no fees for overdrafts, account maintenance, ATM use, or having insufficient funds [11]. Additionally, the developers of CalAccount have promised to provide tools for financial literacy. While they have not yet specified what tools would be available, they are likely to be online financial education programs and perhaps access to financial advising services. This type of program has never been tried before. It represents an innovative solution to encourage Californians to become banked and receive the insurance and financial support they are entitled to, regardless of how much money they have. 

While underbanking may appear to be an unavoidable result of a capitalist banking system, there is significant reason to believe that it is mostly a product of systemic inequalities. One in five California households is unbanked or underbanked. More than 60 percent of unbanked households make less than $30,000 annually. In 2023, workers making less than fifteen dollars an hour made up 81 percent of California’s unbanked individuals [12]. This data demonstrates that economically disadvantaged people are the most likely to avoid engaging with banks. More than 30 percent of black households, 30 percent of Latino households, and 40 percent of disabled households are unbanked or underbanked [13]. Underbanked households are also disproportionately less educated. Households where no member holds a high school diploma are the most likely to be underbanked [14]. The current banking system reinforces the cycle of poverty. Underbanked families must spend more time, money, and resources to access financial services. They are vulnerable to hidden taxes, check cashing fees, and payday lenders who charge up to 400 percent interest. The tendency for underprivileged people to be underbanked is called the financial access gap [15]. Bridging this gap is a necessary step in promoting equality. Without access to building credit, the underbanked tend to take on loans with much higher interest rates—if they can get traditional loans at all [16]. The most common reasons for an individual not to have a bank account are the inability to maintain minimum balance requirements and a fear of fees due to insufficient funds [17]. One study commissioned by the Service Employees International Union found that a zero-fee banking option would save underbanked households over $1,000 annually [18]. Therefore, people use alternative financial services because they are economically disadvantaged, causing them further financial hardship and making it even more difficult to accumulate enough money for a bank account. 

The state must intervene because this is not an issue that the banking industry will ever solve on its own. Banks collected nearly six billion dollars in overdraft fees in 2023, far less than their pre-pandemic numbers of around sixteen billion dollars in annual revenue from overdraft and non-sufficient funds fees [19]. Banks charge overdraft fees as a form of interest. When customers overdraft from their accounts, rather than denying the transaction, banks choose to process it and lend the extra money for a short period [20]. Banks assume this risk not for the customer’s well-being but because of the substantial revenue that overdraft fees provide banks. The goal of the banking industry is, first and foremost, to make a profit. CalAccount could interrupt the financial services industry and contribute to ending the cycle of poverty by introducing banking that is not tied to earning a profit. 

CalAccount’s opposition believes that the state is using CalAccount to solve an impossible problem: a lack of money. Regarding an earlier version of the CalAccount proposition in 2021, a coalition of businesses and banking groups wrote to the California legislature that “individuals who utilize payday lenders and other high-cost loan products do so because they have inadequate cash flow, not because they lack access to banking services” [21]. While this point is valid, it does not acknowledge CalAccount’s scope. CalAccount is not a proposition meant to kill the payday loan industry. Instead, it is meant to help those who want bank accounts but are afraid of never-ending fees or may not trust the banking industry due to its predatory tactics. The need for loans is not equivalent to the need for bank accounts. Bank accounts have many more purposes than loans. By fostering bank account usage, CalAccount could provide pathways for less predatory lines of credit. CalAccount is not meant to address the need for short-term loans. It combats a lack of trust in the banking industry and encourages more responsible financial habits. Further, CalAccount is based on equality. It entitles every Californian to zero-fee banking rather than just the poorest Californians. CalAccount could not create any unfair advantages. Having a CalAccount would never be compulsory, and those who distrust the government would not be forced to act differently. CalAccount would make banking a civil right for all Californians. However, it is still a progressive policy aimed at a small population who would benefit from it greatly while others would be unaffected. 

CalAccount is a revolutionary approach to fixing systemic, generational inequalities. Having a bank account has always been a symbol of empowerment. In 1862, California became the first state to allow women to have bank accounts [22]. Black Americans have a long history of creating their own accessible financial institutions and empowering their communities in spite of discrimination from other formal institutions [23]. Now, California has the opportunity to expand financial access even further and welcome those who have been left out of the banking system. CalAccount would make it easier for the homeless, undocumented immigrants, and those wronged by traditional banking institutions to access bank accounts. California could become the stage for one of the largest experiments in the financial services industry. 

The story of CalAccount is continuously evolving and slowly gaining momentum. On February 21, 2025, California Assemblymember Garcia introduced a bill to officially launch the CalAccount program [24]. Its future is uncertain, but given the foundation that the Blue Ribbon Commission has built, the bill could pass. Whether CalAccount is effective and accomplishes its desired purpose will depend on how it is implemented and marketed to the public. Since this program would involve the government acting as a bank, lawmakers must create safeguards to build trust among the public that the deposited money will never be used for other governmental purposes and that users will maintain consistent access to their money. Since the target population is less experienced in banking, user-friendliness and clear communication will be necessary to prevent confusion. CalAccount must operate with the same ethical standards expected from any financial institution by emphasizing security, privacy, and a commitment to serving the public’s best interests. The state must demonstrate that, as a bank, it prioritizes the financial well-being of its citizens above all else, offering a safe, equitable, and reliable service that builds long-term trust. Only through these measures can CalAccount truly become a positive force in addressing financial inequities. Overall, CalAccount has the potential to revolutionize banking, transforming it from a privilege into a right.