By Jason Alderman | SDUN Guest Columnist

According to a recent survey by the Federal Deposit Insurance Corp. and the U.S. Census Bureau, 17 million American adults now live in “unbanked” households, while another 51 million are considered “underbanked.”

In other words, over 28 percent of households either have no traditional checking or savings accounts (unbanked); or their basic financial needs aren’t being met by their bank or credit union so they also rely on alternative lenders like check-cashing services or payday loans (underbanked).

There have always been millions of Americans who are either unable to – or choose not to – conduct their financial transactions through a bank. Common reasons cited include:

• Don’t have enough money to need an account
• Don’t write enough checks to justify monthly fees and minimum balance requirements; just buy money orders when needed
• Lack of proper identification
• Denied accounts due to bad banking track record
• Language barriers
• Bad previous banking experience or lack of trust in banking institutions.

Big retailers and other alternative financial services providers have rushed to fill the void for customers who can’t – or won’t – use banks or credit card issuers. For example, Bankrate.com lists dozens of prepaid cards that offer many of the same functionalities as regular credit or debit cards, including direct deposit, online purchases and bill pay, ATM access, et cetera. Other businesses provide such varied services as check cashing, money orders, wire transfers, and payday, pawnshop or car-title loans.

However, charges for these services can quickly add up. After you’ve paid a fee to cash your paycheck and bought money orders to pay your monthly bills, you probably will have spent far more than the $5 to $15 a month a regular checking account typically costs.

Although monthly checking and savings account fees at large banks have risen, you still may be able to find free or low-cost accounts at banks and credit unions. To find competitive bank account rates, visit bankrate.com/checking.aspx. To find a credit union for which you might be eligible, use the Credit Union Locator at ncua.gov.

High fees aside, there’s also a safety risk factor to being unbanked. Carrying or storing cash at home tempts robbers; also, money can easily be destroyed in a fire or other natural disaster. Plus, money deposited in FDIC-insured banks is insured up to $250,000 per account (similar insurance is available to credit union accounts through NCUA). It’s also more difficult for unbanked consumers to improve their credit scores due to lack of access to credit-building products like credit cards and loans.

To help bring unbanked and underbanked people into the system, an increasing number of public and private programs like Bank On (joinbankon.org) are being formed. These voluntary partnerships between local or state governments, financial institutions and community-based organizations provide low-income people with free or low-cost starter or “second chance” bank accounts and access to financial education.

In addition, many financial education resources are available, including:

• MyMoney.gov, the government’s website dedicated to teaching Americans the basics about financial education
• FDIC’s MoneySmart program of financial education workshops (fdic.gov/moneysmart)
• Practical Money Skills for Life (practicalmoneyskills.com), a free personal financial management program run by Visa Inc.

There’s no law that says everyone must have a traditional banking relationship. But if you choose to go unbanked, carefully investigate the financial consequences, you may not be saving money after all.

—Jason Alderman directs Visa’s financial education programs. Follow Jason on Twitter: twitter.com/PracticalMoney.