What Is Postal Banking?

Postal banking is the simple idea of going to your local post office for basic banking services, such as cashing checks and paying bills. This was common decades ago, but when commercial banks started offering more competitive interest on savings accounts and equivalent government-backed deposit protection, postal banking fell out of favor and ended in 1967. The practice is still common in many countries around the globe, though, and briefly returned to the U.S. in 2021 through a limited USPS check-cashing pilot, which was subsequently discontinued.^,

Now, however, advocates are looking at postal banking as a low-cost way to provide banking services to people who don’t have access to commercial bank accounts. 

Keep reading to learn more about postal banking, including what it is, the services postal banking would offer, pros and cons, and the current status of postal banking.

How Postal Banking Works

Postal banking is the same as basic banking done at brick-and-mortar commercial banks. Your local post office acts like a bank branch, offering low-cost check cashing, bill paying, and ATM services.

Monthly maintenance and other service fees can be unaffordable for many customers. As a result, unbanked consumers may have little choice but to use expensive check-cashing retailers or payday loans to access basic banking services.

Postal Banking Services

Currently, the USPS does provide some limited financial services. Many branches sell money orders, which may be used to pay bills. Post offices also cash U.S. Postal Service (USPS) money orders for customers.

Postal banking advocates are suggesting these financial services be expanded to include:

• Low-cost ATMs

• Expanded electronic money transfers

• Paycheck cashing

• Electronic bill-paying services

• Testing of other banking products

Recommended: Guide to High-Yield Savings Accounts

What Are the Pros of Post Office Banking?

There are many potential positives to postal banking, especially for people who may have trouble affording or qualifying for commercial bank and credit union accounts.

Access for Those Without a Bank

A surprising number of Americans do not have bank accounts. About 6% of adults do not have a checking, money market, or savings account, according to the 2026 Federal Reserve survey. 

The reasons people are unbanked vary, but in many cases, it may be that low-income people are unable to afford the high minimum balance requirements or pay monthly maintenance and other banking fees, such as overdraft and withdrawal fees.

Postal banking would allow these individuals to perform routine banking tasks, such as cashing a check or paying a utility bill, without paying the excessive fees found at check-cashing retailers and payday lenders.

Recommended: How to Cash a Check Without a Bank Account

Access for People in Rural Areas

People living in rural areas and small towns that may not have a bank branch are likely to live near a post office. According to a May 2026 analysis by the National Community Reinvestment Coalition, 209 counties in the U.S. had just one full-service bank branch. For those residents, banking at the post office could help reduce the need for longer trips to the bank. 

Alternative for Areas With Closed Branches

Adding to the potential problem of access to branches is the fact that many banks are closing branches. According to the FDIC, 1,331 bank branches closed throughout the U.S. in 2025. Between January and September 2026, another 905 bank branches closed across the country.

What Are the Cons of Post Office Banking?

Not everyone is an advocate of postal banking. Below are the cons of post office banking.

The Post Office Can’t Handle It

The American Bankers Association (ABA) has opposed granting powers to the USPS, arguing that providing banking services would extend beyond the Postal Service's core competencies and raise regulatory and consumer protection concerns.

In addition, more banks are offering no- and low-fee accounts as part of a community movement to reach unbanked customers, according to the ABA.

Services Offered by the Post Office May Be Lacking

Commercial banks offer more services and types of bank accounts than proposed postal banking systems, including small loans, high-yield savings accounts, and business bank accounts.

Online Banking May Make Postal Banking Irrelevant

Because online banks don’t have the high overhead that traditional banks do, they may offer many of the same services for lower costs. Many online accounts have no minimum balance requirements, charge low or no maintenance fees, and offer higher interest rates on savings accounts than traditional banks.

Plus, with online banking, as long as customers have a smartphone, they have access to their bank and all of its services.

What Is the Current Status of Postal Banking?

To understand the current status of postal banking, it helps to go back a few years.

In 2014, the U.S. Postal Service Office of Inspector General released a white paper reporting that underserved, unbanked households spent an average of more than $2,400 a year on interest and fees paid to alternative financial sources. Postal banking might help reduce that burden.

Spurred by the white paper, Sen. Kirsten Gillibrand (D-N.Y.), with co-sponsors Sen. Bernie Sanders (I-VT.) and Sen. Jeff Merkley (D-Ore.), introduced the Postal Banking Act in 2020. This would allow USPS to provide some basic financial services.

In 2021, the pilot program began in a handful of cities. However, the Postal Banking Act failed to advance, and the pilot was terminated in 2025.^,

The Takeaway

Interest in postal banking has been on the uptick in recent years as consumer advocates and some lawmakers have looked for ways to offer low-cost financial services to the unbanked population. Postal banking could offer an affordable alternative to expensive check cashing and payday services.

Opponents of postal banking believe the low-cost need is already being met by many banks and that the post office may have trouble expanding into so many new areas while still being able to perform its current duties effectively.

The debate points out that searching for low-cost, high-quality bank accounts is important. Lantern can help you search for savings accounts with high interest rates and low fees.

Explore high-yield savings accounts with Lantern by SoFi today.