America’s unbanked

By Felix Salmon
December 2, 2009
EconomicInclusion.gov website is a fantastic resource for information on the unbanked -- it has all the latest figures, including the rather depressing fact that if you look at the black and hispanic population in the US, one in five is unbanked. Single mothers, too, are disproportionately likely to be unbanked, none of which should come as a surprise: all of these things are basically proxies for the likelihood of being poor. And of course if you don't have a bank account that just makes you poorer, since you're forced into a system where banking services are much more expensive.

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The FDIC’s EconomicInclusion.gov website is a fantastic resource for information on the unbanked — it has all the latest figures, including the rather depressing fact that if you look at the black and hispanic population in the US, one in five is unbanked. Single mothers, too, are disproportionately likely to be unbanked, none of which should come as a surprise: all of these things are basically proxies for the likelihood of being poor. And of course if you don’t have a bank account that just makes you poorer, since you’re forced into a system where banking services are much more expensive.

Not having enough money to feel they need an account is the most common reason why unbanked households are not participating in the mainstream financial system…

About 66 percent of unbanked households use the following alternative financial services (AFS): non- bank money orders and non-bank check-cashing, pawn shops, payday loans, rent-to-own agreements (RTOs), and refund anticipation loans (RALs).

Not mentioned on the list but also increasingly popular are prepaid debit cards, which are better than things like pawn shops and check cashers, but still much worse than just opening an account at the local credit union.

Be sure to play with the map at the top of the website: you can see state-by-state data there, as well as see major conurbations broken out. For instance, in the Riverside-San Bernadino area of California, over 24% of hispanics are unbanked; in Mississippi, one in three blacks are unbanked, and another one in three blacks is underbanked.

It’s not clear what if anything the government is doing about this problem, but it’s definitely a problem. If we can spend this much effort on trying to get healthcare for all, can we spend a tiny fraction of that on trying to get banking services for anybody who wants them as well?

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