The Unbanked

December 11, 2009 by blackgirlgrown
Filed under money

The Federal Deposit Insurance Corporation (FDIC) recently released the findings of its FDIC National Survey of Unbanked and Underbanked Households. The survey is significant in better understanding of which Americans remain outside the banking system.

The study, which is the most comprehensive survey to date of the unbanked and underbanked, reveals that more than one quarter (25.6 percent) of all households in the United States are unbanked or underbanked and that those households are disproportionately low-income and/or minority.

What’s the definition of unbanked and underbanked?

Unbanked: Households answering “no” to the question, “Do you or does anyone in your household currently have a checking or savings account?”
Underbanked: Households that have a checking or savings account but rely on alternative financial services. Specifically, underbanked households have used non-bank money orders, non-bank check-cashing services, payday loans, rent-to-own agreements, or pawn shops at least once or twice a year or refund anticipation loans at least once in the past five years.

On African American Households:

Blacks are more likely to be underbanked than the population as a whole (an estimated 31.6 percent)
Overall, almost 54 percent of black households

Why Having a Bank Account is Important:

Alternative providers such as check‐cashing companies and payday lenders, whose services cost far more than those of banks. These alternate providers generally not able to help their customers prepare for the future by encouraging asset building.
Research shows check cashers charge an average of $40 to cash a payroll check. A full‐time worker could save $40,000 over his or her career by switching from check cashers to a lower‐cost checking account.
A banking relationship increases chances of one day buying homes, sending your children to college and contributing to the prosperity of your community.
Without access a banking relationship, people are basically living in a cash economy where there’s no opportunity to convert that into wealth.

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