Unbanked American households hit record low numbers in 2021

Table of Content

• Are some groups more likely to be unbanked?
• Why are people unbanked or underbanked?
• The number of Americans without a bank account drops to lowest level in more than a decade
• Will the number of unbanked rise if the U.S. has a recession?
• Are some groups more likely to be unbanked?

The FDIC initiated an educational campaign to get more Americans to open an account to enable the direct deposit of those funds. And banks such as Capital One and Ally Financial ended overdraft and other fees that have been a key barrier to some Americans accessing the banking system. "Safe and affordable bank accounts provide a way to bring more Americans into the banking system and will continue to play an important role in advancing economic inclusion for all Americans,'' FDIC acting chairman Martin J. Gruenberg said in a statement.

And nearly 16% of households with a single mother were unbanked as compared to about 2% of married couples who lacked an account. And since 2011, when 8% of U.S. households were unbanked, the highest since the start of the survey, and the record low reached in 2021, roughly half of the drop was due to a shift in the financial circumstances of American households the FDIC says. Additionally, last year, homes where the head of household was out of work were nearly five times more likely to not have a bank account as compared to those where the household head was employed.

Are some groups more likely to be unbanked?

Roughly 29% said fees or not having the required minimum balance were the primary reasons they didn't have a checking or savings account, as compared to 38% who cited those obstacles in 2019. The number of American households that were unbanked last year dropped to its lowest level since 2009, a dip due in part to people opening accounts to receive financial assistance during the pandemic, a new report says. Meanwhile, nearly 15% of households with a working age member who had a disability were unbanked compared to almost 4% of other households.

"During the last recession unbanked rates did indeed go up,'' Karyen Chu, chief of the Banking Research Section at the Center for Financial Research, said during the call. A lack of banking options delayed some households from getting federal payments aimed at helping the country weather the economic fallout from the COVID-19 health crisis.

Why are people unbanked or underbanked?

Those who have a checking or savings account, but also use financial alternatives like check cashing services are considered underbanked. Roughly 4.5% of U.S. households – or 5.9 million – didn't have a checking or savings account with a bank or credit union in 2021, a record low, according to the Federal Deposit Insurance Corporation's most recent survey of unbanked and underbanked households. The numbers of the unbanked were greater among households that included those who were working age and disabled, lower income, included a single mother, or were Black or Hispanic. Among white households for instance, 2% didn't have a bank account last year as compared to 11% and 9% of their Black and Hispanic counterparts. Many of those who are unbanked say they can't afford to have an account because of the fees for insufficient funds and overdrafts that are tacked on when account balances fall short.