Record low 5.6 million households remain unbanked

By Godson Umejiego, Bureau Chief, The Americas

Nearly 96 per cent of all US households were banked in 2023, according to just-released national survey by the Federal Deposit Insurance Corporation (FDIC). The 2023 FDIC National Survey of Unbanked and Underbanked Households found that 4.2 per cent of US households (representing 5.6 million households) lacked a bank or credit union account.

While the nation’s overall unbanked rate remains at its lowest level since the FDIC survey began in 2009, lower-income, less-educated, Black, Hispanic, disabled, and single-parent households continue to be significantly more likely to be unbanked. In addition, the FDIC survey found two-thirds (66.2 per cent) of unbanked households relied entirely on cash while a third (33.8 per cent) of unbanked households relied upon a combination of prepaid cards or nonbank online payment services such as PayPal, Venmo or Cash App to conduct transactions.

“Access to safe, affordable bank accounts is fundamental for consumers to be able to participate in and benefit from our nation’s economy,” said FDIC Chairman Martin J. Gruenberg. “This survey reveals that significant disparities in access to the banking system for minority, lower income, disabled, and single-parent households still exist and need to be addressed.”

Since 2009, the FDIC and the US Census Bureau have conducted a comprehensive biennial survey of US households to measure the use of banking and financial products and services. The unbanked rate was at its highest recorded level (8.2 per cent) in 2011, falling by almost half to 4.2 per cent in 2023, corresponding to an increase of approximately 5.3 million banked households.

Other key findings include:

Minority Unbanked Rates – While unbanked rates among minority households fell by about half since 2011, they remain significantly higher than White households: Black (10.6 per cent); Hispanic (9.5 per cent); American Indian or Alaska Native (12.2 per cent); and White (1.9 per cent).

The Underbanked Rate – 14.2 per cent of US households (representing 19.0 million households) were underbanked in 2023, meaning these households had a bank or credit union account yet primarily used nonbank products and services to meet their financial needs.

Mobile Banking – Nearly half of banked households (48.3 per cent) used mobile banking as their primary method to access their accounts. Over the past decade, use of mobile banking as the primary means of account access increased almost ninefold, while use of bank tellers fell more than half and use of online banking declined more than one-third.

Nonbank Online Payment Services and Prepaid Cards – Between 2021 and 2023, use of nonbank online payment services such as PayPal, Venmo, or Cash App increased, while the use of general purpose reloadable prepaid cards decreased. Compared with banked households, unbanked households’ use of nonbank online payment services and prepaid cards as a substitute, rather than to supplement, a bank or credit union account.

Credit Cards – 76.4 per cent of all households had a credit card in 2023. However, about one-in-six households (15.7 per cent) had no access to mainstream credit, down from 20.0 per cent in 2017. These households likely did not have a credit score with the nationwide credit reporting agencies, which could make it more difficult to obtain mainstream credit should a credit need arise.

Buy Now, Pay Later – For the first time, the FDIC asked households about their use of Buy Now, Pay Later (BNPL), short-term loans that allow consumers to split their payments on purchases over time. In 2023, 3.9 per cent of all households used BNPL in the past 12 months.

Crypto – The survey included questions about household use of crypto or digital assets to store and transfer money. In 2023, 4.8 per cent of US households owned or used crypto or digital assets in the previous 12 months. A significant majority of these households held crypto or digital assets as an investment (92.6 per cent) while only 4.4 per cent of these households used digital assets as a form of payment.

The FDIC continues to promote the benefits of safe, affordable bank accounts through the agency’s #GetBanked initiative.