While the vast majority of Americans possess checking and savings accounts, use credit cards, and finance major purchases with loans, a surprisingly large share of Americans struggle with barriers to opening and maintaining financial accounts. This makes daily life more difficult in an increasingly cashless society—particularly during rising inflation. The lack of access to financial services doesn’t mean they are not desired or needed, particularly by lower-income households. A variety of lending services fill in market gaps, including check protection services and installment loans. The public—and policymakers—should be aware of the vital role these services play.

While it’s tempting to criticize those specializing in serving this population, and to view the fees charged and practices employed as exploitative, these services fill a critical need and must take into account the short-term nature of the loans plus higher risks and costs of providing these services. In fact, some of the most heavily-criticized financial services practices—so-called installment loans or “payday lending,” and check protection services—enable vulnerable communities to participate more fully in today’s tech-heavy economy. Without them, people are forced to turn to the black market and be even less likely to have access to banking and loan products.

Policymakers should consider policy reforms to encourage continued innovation in the financial sector and recognize that consumers are best positioned to decide which services meet their needs at any given time, because—despite regulators’ best intentions—interventions often restrict consumer choice, ultimately resulting in fewer options and higher costs.