If you can't imagine paying the bills without a bank, you may be
surprised to learn 10 million households representing 17 million
adults make do without savings accounts or checking accounts,
according to a new government report.
The 2011 FDIC National Survey of Unbanked and Underbanked
Households, released last month, finds a slight increase in the
number of those going without a traditional bank account. According
to the
survey findings
, 8.2 percent of households are unbanked while another 20 percent
are underbanked.
Tracking banking habits
The 2011 survey is the second one conducted by the Federal
Deposit Insurance Corporation, the first being conducted in 2009.
Since that time, the number of unbanked households has increased
0.6 percent while the number of those who are underbanked rose
nearly 2 percent.
For purposes of the survey, the FDIC defines unbanked and
underbanked households using the following criteria:
-
Unbanked:
Households which do not have any type of deposit account at an
insured financial institution
.
-
Underbanked:
Households which have a deposit account but also rely on
alternative financial service providers such as a non-bank
check-cashing or payday loans.
Of all households, 29.3 percent do not have savings accounts and
10 percent do not have checking accounts. Meanwhile, one in four
households have used an alternative financial service in the past
year, with 40 percent of unbanked and underbanked households using
these services in the past 30 days at the time of the survey.
Groups most likely to skip bank accounts
In addition to looking at the overall rate of unbanked and
underbanked households, the FDIC identified several demographic
groups that were more likely to skip the use of savings accounts
and checking accounts.
Less than 50 percent of these groups report being fully
banked:
- African-Americans: 21.4 percent unbanked and 33.9 percent
underbanked
- Households experiencing unemployment: 22.5 percent unbanked
and 28 percent underbanked
- Households with incomes less than $15,000: 28.2 percent
unbanked and 21.6 percent underbanked
- Unmarried female family households: 19.1 percent unbanked and
29.5 percent underbanked
- Hispanics: 20.1 percent unbanked and 28.6 percent
underbanked
Instead of traditional bank accounts, these household tend to
view alternative financial services including non-bank
check-cashing and money orders as more convenient. In addition,
credit products such as payday loans, refund anticipation loans and
rent-to-own services are considered easier to obtain than financial
products offered by banks, credit unions and other insured
institutions.
Finally, the FDIC discovered the
use of prepaid cards
had increased 5.6 percent among unbanked households from 2009 to
2011. Last year, 17.8 percent of the unbanked used these cards,
compared to 10 percent of the overall population.
In concluding its report, the FDIC suggests its findings could
be valuable for policyholders and financial institutions as they
work to improve access to banking services for currently
underserved populations.