Recent financial regulations from Washington are impacting people in ways that lawmakers likely did not foresee: They are pushing people out of the market for mainstream financial services and toward more expensive, risky cash-based lifestyles. As checking account fees increase as a result of regulations, more people are looking to check cashers as an alternative. The check cashing establishments lining Highway 41 from the Big Chicken down to I-285 are a testament to the number of people using these types of services.

Challenges faced by the unbanked are particularly relevant to Cobb County. Cobb has the second highest Hispanic population of any county in Georgia, second only to Gwinnett, and Hispanics are more likely to be unbanked. According to the FDIC’s 2009 National Survey of Unbanked and Underbanked Households, 45 percent of Hispanic households in Georgia do not have a bank account. This is significantly higher than the 12 percent of Georgia households without a banking relationship.

Ironically, those who choose not to use a checking account because of fees can find themselves paying even more with other money management methods. Somebody with a checking account can sign up for direct deposit and access funds immediately through their debit card, but those without a bank account must burn gas to pick up their paycheck; pay check cashing fees to access their funds; purchase money orders and stamps to pay bills; and limit their shopping to brick-and-mortar stores even if shopping online would be cheaper. These costs add up quickly.

One option that the unbanked should consider instead of relying on cash is a prepaid card that offers benefits similar to a traditional checking account. Bretton Woods, Inc., a management consulting firm, recently conducted a study that found prepaid cards are often cheaper than using check cashers. According to the study, the average person using check cashing services and money orders spends between $9 and $48 each month on fees. In contrast, prepaid card users spend between $8 and $20, which includes the cost of replacing funds on the card if it is lost or stolen.

Many prepaid cards also offer important protections for cardholders. For example, users are not held liable if their card is stolen, and cards can provide an important means of recourse — similar to credit cards — if a merchant fails to deliver promised goods or services. Some cards even allow funds to be direct deposited from an employer.

All Americans, not just Hispanics, are potentially harmed by the misguided regulations that are forcing people to choose cash-based lifestyles. More education is needed to inform them about products like prepaid cards that can help connect them to the broader economy.

For many folks in Cobb County, the main obstacle to achieving financial stability and accessing mainstream financial services is lack of information. The more educated our citizens are about the choices they have, including prepaid cards, the more financially secure they can become. And as folks build a better life for themselves and their families, not only do they benefit, but ultimately their communities and the local economy benefit as well.

Mario H. Lopez is president of the Hispanic Leadership Fund, a non-partisan advocacy organization dedicated to strengthening working families by promoting common-sense public policy solutions rooted in free enterprise, limited government and individual freedom.