For most of us, having at least one bank account is something we take for granted. We often have two or more accounts for various purposes. However, not everyone has a bank account of any kind. About seven percent of the US population is what is called “unbanked”. These are people who do not use banks at all. In some cases, it is because the people don’t have any trust in banks or other financial institutions and think banking fees are too high, some think they don’t have enough money to need one and others have been turned down by banks due to past financial mismanagement.
Some people are considered “underbanked”(just under twenty percent of the US population). This means they may have a bank account but often use nonbank services for such things as cashing a check or getting a small loan. In both unbanked and underbanked households, the people are usually low income and often less educated than those who use banks regularly. Among the groups who may be unbanked or underbanked regardless of income or educational status are younger households, households of disabled working persons, Hispanics and blacks.
The FDIC wants to change the way the unbanked and underbanked think of banking as too expensive or complicated. Through surveys and other methods of outreach, the FDIC is gaining a better understanding of what unbanked and underbanked people need as far as services, which includes better access and control of personal control of finances using mobile banking. One area that makes a difference is offering free or low cost check cashing and bill paying options. Some banks now offer banking entirely online for those who prefer going “checkless” and use a debit card or mobile app for purchases. “Second chance” checking account options are available in a number of banks to those who have had problems with managing their finances previously and been turned down when trying to open a bank account.
In an effort to provide better banking access to communities, many banks are open longer and have employees who speak in the non-English languages frequently spoken in the community. One of the needs many unbanked people have is not having a debit card to use in place of cash or have ready access to cash. To address this need, many banks are offering prepaid cards that can be used like a debit card, including withdrawing cash at an ATM.
The FDIC also has several programs available for children and teens to help them learn about good money management. These programs include Money Smart for Young People (pre-K to grade 12), Youth Savings Pilot and Youth Banking Network. Some of these programs are offered through partnerships with schools to help train young people to manage their finances.