More Americans are making use of the mainstream banking system as the economic recovery reduces unemployment and gives more people the financial stability to maintain a bank account.
One in thirteen households lacked a bank account at an insured bank in 2013, the Federal Deposit Insurance Corporation reported Wednesday, a decline from 2011.
People lacking a bank account are counted as “unbanked” in the FDIC’s biennial National Survey of Unbanked and Underbanked Households released Wednesday. The 0.5 percentage point decrease in such households from 2011 to 2013 was driven in particular by improvement in the economic fortunes of Hispanics, who are more likely to lack bank accounts than the average American. The share of unbanked Hispanics fell from 20 percent to 18 percent over the past two years.
The possibility that Americans are locked out of the mainstream financial system has become an increasingly hot topic in Washington in the wake of the financial crisis, as new regulations on banks have raised the cost of doing business while the payday lending industry has rapidly grown.
The majority of unbanked households told the FDIC that they didn’t have enough money to keep in an account or to meet a minimum balance. Large numbers also said that they didn’t trust banks, that account fees were too high or unpredictable, or that they lacked the proper identification or credit history to open an account.
In addition to the families who have no bank accounts, one in five Americans have bank accounts but also use check-cashing services, payday loans, prepaid debit cards, qualifying as “underbanked” in the FDIC’s report.
Altogether about one quarter of Americans use alternative financial services, a number that hasn’t changed significantly in recent years.
Noting the increase in use of bank accounts as the economy has picked up in the wake of the financial crisis, the FDIC report concludes that banks or the government “might consider ways to cushion the impact of adverse financial shocks on a household’s ability or desire to maintain a bank account,” suggesting “targeted outreach or financial education for recently unemployed households to encourage them to remain in the banking system.”
The FDIC’s survey was conducted by the U.S. Census Bureau in June 2013, and received responses from 40,998 households.
