“When times got hard, I started having too many overdrafts and eventually the accounts I had were closed,” says Tory Watterson, a single mother of two children in Northeast Houston. “Instead of dealing with the stress of that, it’s much easier to just cash my check at a check cashing center and pay my bills all at the same time. A lot of times our people just don’t want to deal with or know how to handle debit cards, online payment centers or credit cards.”

Ms. Watterson recognizes the downside to not have a stable banking relationship with a financial institution. “Not having a bank account adversely affects your future ability to secure financing for large purchases such as homes, and business loans. It proves responsibility to the financial institution, so years later you can get approved for loans and credit. But that takes discipline,” she says.

Over 25 million households in America do not have bank accounts, according to a study conducted by the South Carolina Council on Economic Education, based in Columbia, S.C. Even more alarming is that 80 percent of those households are Blacks (46 percent) and Hispanics (34 percent).

Reasons cited in the study for not having a bank account were poor account management skills; infrequent check writing; a dislike for dealing with banks; lack of enough money; high service charges; high minimum bank balances; credit problems; and no banks near home.

Many, like Ms. Watterson, also see check cashing centers as a cheaper way to handle their payroll checks versus banks. But according to a Consumer Federation of America survey of check cashing outlets, on average it cost $24.45 to cash a $1,002 Social Security check in 2006 and a worker paid $19.66 every week to cash a $478.41 handwritten paper check.

Still if not managed properly having a bank account can be greatly expensive—especially for someone living paycheck to paycheck. Poor tracking of an account balance can incur penalties ranging from $20 to $30 for bounced checks and account overdrafts. Balances on closed accounts ruin credit reports.

Twenty-four-year-old Phoenix native Jennifer Cobb sees a need to master responsibility and heighten education in Black and Hispanic communities. “We choose to be irresponsible and avoid disciplining and structuring our financial lives. We choose the seemingly easy route of check-cashing centers, but we still lose in the end. I dislike check cashing centers,” she argues. Ms. Cobb has maintained a bank account since the age of 17.

Clente Flemming, president of South Carolina Community Bank, agrees that education is the answer and says ridding communities of check cashing centers will not solve the problem. “If we shut down every one of them, it will not better our ability to create generational wealth. The credit crisis in the Black community is at an all time high. It’s about want versus need. It’s about paying your bills on time and learning management,” he adds, in an interview with The Final Call.

Over 52 percent of the unbanked families previously had a checking account, suggesting that something about their financial circumstances or behavior led them to leave the financial mainstream.

Mr. Flemming’s bank is the only Black bank left in the state of South Carolina, which he says represents a pattern throughout America. “Citibank lost nearly $10 billion dollars last quarter, but if you add up the assets of all Black banks in the country, we wouldn’t come near that number. Black banks are becoming extinct. So we as a people have to control and recycle the money that is coming into our community and build. Create jobs and educate.”

Educate is what the South Carolina Council on Economic Education intends to do this year with their findings. They have developed a coalition with financial experts from the University of South Carolina’s Moore School of Business to gather statistics one county at a time. Coalition president Helen Meyer sees education as vitally necessary to the empowerment of families.

“We have to spread this information throughout the state and the country and increase awareness. This problem did not just happen overnight, so it is going to take long term action plans to reverse the downward spiral,” she says.